RFP how-to

 

From the Simplexity Guide to Web Software Development. You are welcome to use this 'how-to' in any manner you wish as long as you credit Simplexity, LLC, (www.simplexity.net) where appropriate. This article was last updated in November of 2006.

Introduction

There are many right ways to get a software project completed on time, on budget and on target. For relatively straightforward projects like re-architecting a web site that already exists, a simple contractual arrangement stating the scope of work, payment terms, and a project plan will do just fine. But for projects like creating or evolving products or custom applications you should consider a more detailed approach. The following is one way to deal with this more detailed, complex project process—issue an RFI, or RFP/RFQ.

Definitions

The best tools to assist in a complex vendor selection process are a Request For Information (RFI) or a Request For Proposal (RFP). Both of these ‘request documents’ can be based on a standard outline, and both are very effective as information-gathering tools and methods to select and evaluate potential vendor partners. The difference between the two documents is important.

An RFI implies that no commitment needs to be made to any responding party.

An RFP implies the probability of a commitment being made to one or more respondents at some point. Use the title appropriately and include the conditions of acceptance in an RFP.

In some instances you will find an RFP referred to as a Request For Quotation (RFQ). The title RFQ implies a stronger commitment to making a selection based on the responses as it specifically requests that a price be quoted. Use the RFQ if you are certain you will find the right vendor in the prospects you issue the document to, or if your requirements are so set in stone that they can't possibly change.

Use any of the titles RFI, RFP, and RFQ with an understanding of what the vendor will consider the degree of commitment to be from you, the document creator. No matter what you call your document, potential vendor partners will know what your document really is!

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The RFI/RFP/RFQ Approach and Tips

The outline below is appropriate if what you are looking for is a comprehensive, long-term relationship, with contractual and ongoing cost-management implications.

  • Quickly find the right list of vendors to be included in your evaluation. Check the research groups such as Forrester and Gartner, talk to friends, and use the Web. There may even be some blogs that can help. If you don't know the right list of vendors, then use an RFI, and make it short and simple. Both identified and potential vendors can respond about their level of interest in the project. Post it on your web site and you will be amazed at how many responses you get.

  • Do the vendors you deal with a favor by knowing the right questions to ask at the beginning of the relationship. That way you can shorten the prospect list immediately. For example, if you only buy software that runs on UNIX, make sure the vendors you are talking to know that at the beginning of your evaluation. In fact, tell them that on the phone, in the elevator, at lunch or through Email, or wherever your relationship begins. It will save both of you a lot of time and energy if the project you want to do can only be accomplished on Microsoft platforms.

  • Security standards are another evaluation criteris you can use early in the relationship to help you decide how to shorten the list. Review your company security policies and make certain your potential vendor partners can abide by them.

  • When you issue an RFI or an RFP, plan for the document to become a part of your formal contract with the vendor. Having this document attached to your contract will make it quicker for you to complete a contract with your chosen vendor or vendors after you have made a decision, since many of the negotiable issues will already be documented.

  • Be wary of timeframes you build into any RFI/RFP and/or contract. On the one hand, your business and the technologies that support your business are moving so rapidly that there will be a lot of unpredictable, but impacting, change you need to manage. In addition, there will be a significant amount of work required to evaluate and respond to the responses you receive. A double-edged sword! If you issue an RFP and don't receive and act on the responses within 6 to 8 weeks, you might as well issue another one. Request quick responses and be prepared to evaluate and comment quickly as well. For example, if you require a meeting of several people to review and evaluate the responses, then schedule the meeting before you send out the documents so that you can resolve schedule conflicts in a reasonable time frame.

  • Make friends within your organization who can assist with the document development and evaluation process. Developing an RFP is an exercise that may require (in large organizations) financial analysis, legal review, technical support, senior management review, and rapid decision making. Visit departments in your firm that can assist you with these activities, and solicit their help early on. You will find that they can smooth out several parts of the process for you if you include them up-front in your process. Explain what you are doing, why you are doing it, and provide them with the appropriate sense of urgency for the task.

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The RFI/RFP/RFQ Document

The following is an expanded outline for a request document that should end up being an integral part of any contract you and your vendor partners enter into. When deciding whether to call your document an RFI, RFP, or RFQ, consider the level of your commitment to the vendor. If you are only searching for choices and finding what your options might be, then call it an RFI and do not discuss what you will do with the responses. If you plan to select someone for the project among the respondents, then call it an RFP. If you know for sure that you will find a partner in the respondents, and you have spent lots of time on the requirements and specifications, then call it an RFQ.

For an RFP or RFQ, include detail that explains how you will make the selection, how and when you will notify the selected vendor(s), and how you will notify the others. Include any details that may be pertinent to your contracting process. Issues such as bonding, performance insurance, and other points that are specific to your process should be detailed in RFP/RFQ, but can be left out of a RFI, as can detailed specifications-general directions and business impacts may be as far as you can go with an RFI.

If you have never issued an RFI/RFP/RFQ, then follow the outline presented here. If you already have a process in your organization, this outline may provide you some new categories or ideas to consider for your process.

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  1. Introduction and Instructions

    This section explains why you are issuing the document, when responses are due back, the number of copies of the responses you want from each vendor, and the format of the responses (hardcopy or electronic). State any assumptions you make, or that you think the respondent can make, about the proposal. Here is a sample:

    “(Your Company) is evaluating requirements and solutions for architecting and deploying an intranet. We are also, in parallel with this project, moving from an all-analog leased line and dial-up environment to a digital leased line and higher-speed DSL-based environment supporting TCP/IP managed by an SNMP network management system. That networking infrastructure is not a part of this RFP, but we will be happy to brief you on our plans.

    This request for proposal is being released to a limited number of potential strategic partners. We would like your responses back by Wednesday, February 4, 5pm PDT. Please deliver five 8 1/2 x 11, 3 hole-punched copies and one Microsoft WORD electronic version of your response via E-mail to (your name & address). You are also encouraged to provide your response in HTML on your web site, but that should be in addition to the above format requirements.

    If you would like an electronic version of this RFP (in WORD format), please contact (your name and telephone #).

    Please note that any or all portions of the RFP or its response are subject to inclusion in a purchase contract should the project be awarded to you.

    We may want to prototype the solutions you recommend in 2-3 of our office locations by January, 2008. We would expect any equipment, software, management systems, content, installation, and support for that pilot to be provided at no cost to us.

    The total project budget is in the neighborhood of $X. That includes all software, equipment, deployment, development, testing, installation and 1st year support. If you cannot work within the budgeted amount, or abide by any other of these requirements, please call (your name) immediately.”

    You should consider holding a vendor conference, where you invite all the respondents to come to a meeting at which you review the RFP document and answer their questions. Although this sounds like an invitation for trouble, you will be amazed at the cooperation shown in this sort of a forum. You may also be amazed at who knows whom! Be sure to issue the document two weeks or more in advance of this meeting so the respondents can prepare their questions.

    The vendor conference may cause you to step back and revise your approach because the different vendors might ask questions or provide information that would be of value in your process. Be prepared to document these issues as they arise, and present them to all at the vendor conference. That way, you ensure all respondents have the same information to consider, and you retain the openness of a level playing field for all.

    Another side benefit you may receive from this meeting is having one or more vendors at your meeting form an alliance that could result in a combined response that is better than any response a single vendor could have provided.

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  2. Format and Obligations

    In this section of the request document, be clear about the way you want the respondents to respond to your questions. We recommend insisting that they repeat each of the questions exactly as you wrote them, before providing an answer. Information they provide that is additional, for example, literature or specifications you did not ask for, should be included as appendices.

    “Your responses should be in a standard format. When referring to any portion of this RFP, please use the section titles and number sequence set forth in the 'Contents' of this document. Please make your responses as succinct and to-the-point as possible. We are under no obligation to clarify your responses if they are unclear or not in this standard format. The acceptance of proposals does not obligate (your company). (Your company) is not liable for any costs incurred by prospective vendors in the preparation, presentation, demonstration or any other aspect in the process of proposal, evaluation or contract negotiation. (Your company) reserves the right to reject any and all proposals received by reason of this request; to accept one or any combination, of the systems proposed by any prospective vendor; or to negotiate separately with any source whatever in any manner necessary to serve (your company’s) best interest.”

    The critical aspect of this section is that you want to control the look and feel of the responses so that it makes evaluation much easier. It is very difficult to contrast responses that are so different in format that you cannot quickly compare them. However, write this section with some flexibility so that you don't place an unnecessary burden on the respondents. Dictating things like font style and size goes way too far.

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  3. Pricing Scenarios

    4. If there is a particular way you plan to pay for the project, describe it here. Do you prefer fixed price or hourly bids? What are the respondent's T&M (time & materials) rates? If you are looking to the respondents to make a recommendation about how they expect to be paid, you should ask for that here, too.

  4. Proposal Warranty

    The proposal warranty section makes it clear that the vendor is responsible for the accuracy of their answers and the accuracy of their specification. It is an important bit of legal language that you can develop with the assistance of your good friends in the legal department of your organization (there are also many fine legal resources available on an outsourced basis):

    “By submitting a response to this RFP, the prospective vendor represents and warrants that it has sufficiently informed itself in all matters affecting the performance of the solution or of the proposed systems, furnishing the labor, supplies, material and equipment needed in performing the specifications including performance of terms & conditions; that it has checked its proposal for errors and omissions; that prices stated in their proposal are correct and as intended, and are complete and correct statements of the prices for performing the work or furnishing the labor, supplies, materials and equipment by the contract document.”

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  5. Binding Proposals

    This is a simple statement that makes it clear that for a certain number of days (usually between 30 and 120) any commitments of people, delivery schedules, or prices found in the proposal remain binding. In other words, provided that the scope of the project stays consistent, what they propose can't change in that period of time. Again, this can be a double-edged sword. With intranet and web technologies changing as fast as they do, you probably want to limit this to 30 days because it could be to your benefit if the proposal does change! The caveat here is that you must be prepared to react and reply quickly. Reserve conference rooms and schedule evaluation meetings as soon as you know the timing for responses. Also, be sure that everyone attending knows that decisions will be made:

    “Following the date for submission of proposals, and prior to contract award, the Vendor's proposal shall be binding upon the Vendor in all respects, for a period of X days.”

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  6. Hold Harmless

    Use this section to make it very clear that it is your choice to go forward with one vendor, more than one, or none at all, and that the other respondents cannot make any claims if they get left out. You should include this section in all three types of requests, even an RFI:

    “In submitting a proposal, prospective vendor understands that (your company) will determine which proposal(s), if any, is/are accepted. Prospective vendor waives any right to claim damages of any nature, whatsoever, based on the selection process, any communications associated with the selection, and the final selection of the successful vendor(s).”

    Some words of caution that may be repetitive but worthwhile. Use the appropriate title for the document you produce. Don’t call it an RFI if you really want a commitment. Treat all respondents equally during the review process and select words that are very non-committal until you are ready to commit. Don’t lead people on, as respondents have very long memories and the world continues to get very small very quickly!

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  7. Confidentiality

    Request that respondents very clearly mark in their responses material that is confidential or proprietary. You need to do the same in your proposal. Some respondents will ask that you sign non-disclosure agreements, too. Be careful about signing non-disclosures that have a time period longer than a few months. Many of them are worded so they last for years, which is unreasonable and of course, cannot be tracked anyway.

    You may also want to include a non-disclosure for the respondents to sign if you are requesting assistance with a project or product that will provide you a competitive edge in your industry. Or you may be involved in merger or takeover activities that require a high degree of confidentiality.

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  8. Schedule

    This can be just a bullet item list of what is happening and due, by whom, and when. The critical point here is not what it looks like, but what it implies and how you intend to follow it. Remember that a tight schedule binds you as tightly as it does the vendor. Ensure that you have your process and people ready to deal with the pace you set in the schedule. Your credibility goes downhill very rapidly if you imply speed and then take your time, or the reverse.

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  9. Evaluation Criteria

    Although this is not required, it is a very smart thing to add to your document. It clearly explains to the respondents how you plan on making a decision based on their responses. Are you going to assign numeric values to each point and weigh them according to your priority? Are you going to choose based purely on cost? Be as clear about this area as you can so that the respondents give you something you can act on and sell to your management.

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  10. Organization

    Here is where you should ask questions about the firms that are responding: How many people do they have; how much revenue; how many similar systems have they developed; what their development process is.

  11. Publicity

    Include a statement in your contract about publicity. Make sure that the respondents need to get your permission to use yours or your organization’s name in any marketing or press releases. A press release is an announcement of an agreement to use a product or service and what the product or service will be used for. It mentions both your company and the vendor’s, and many time quotes high ranking executives. You should consider saving the use of a press release for a later time by trading that publicity for outstanding performance by the vendor.

    You may also find that your key respondents want you to do testimonials for them. A testimonial is a statement you provide your vendor that says their product or service is the best thing since the invention of the browser. You should be careful of this, because if you do a testimonial for one vendor, you may end up getting pressure to do them for others. This can be very time consuming, and respondents are famous for giving you very tight timelines to complete and review your input or quotations. If you have an internal public relations or media relations group, work with them on publicity and external marketing issues.

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  12. Problems That Are Driving the Proposal

    It can help a great deal to detail the business and technical problems your business has that you are trying to solve. In fact, this should be the largest section of the document and should always be marked as confidential. Expend a great deal of effort here and involve any technical staffs that are needed to ensure that content is complete and accurate. However, make sure that this is a statement of need or problem, and not a solution. Define the problem and state the requirements. Don’t develop a solution. That is what you are asking the respondents to do for you.

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  13. Requirements and Specifications

    When you have detailed specifications, include them. If part of the RFP is to hire someone to develop specifications, you will need to say that as well. In any case, a predictable cost for the implementation of your project depends on the availability of detailed, agreed-to specifications for content, design, transactions, security, and standards. You need to either have them already, or hire someone to help develop them, to have predictable costs and timeframes for any project.

    State your vision clearly by characterizing what you have today versus what you know you need to have in six months or a few years. Realize that you can't outsource or contract for anything for reasonable cost unless you have this well defined. Having someone else provide a solution to your problem still requires you to articulate what the problem is.

    If you are asking for software proposals, ask for information about versioning and support.

    It is good to ask about training in this section-how does the respondent provide it and how much do they typically provide?

    What about project management? Who will provide that key function?

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  14. Other Potential Contractual Issues to Consider

    As was mentioned before, if you are lucky enough to have internal legal advice, use that guidance wisely. It not only helps you stay out of hot legal water, but it can save you money by avoiding future litigation and helping to ensure respondents know your due diligence process. If you do not have internal legal advice, find successfully negotiated contracts that have already been signed in your company that you can use as a starting point. Company groups that negotiate telecommunications contracts might be a very good place to start.

    Unless you are in a very big hurry or unless you are working with a vendor you have a long-term relationship with, always be mindful of whether you are negotiating from your own contract or than the vendor's. Don’t discard either out of hand, however.

    If you are impressed with the people the vendor sends your way, then insist that they be the ones that are assigned to work with you. Many relationships go sour quickly when new people are assigned to you, when you were expecting the “A” team. Some consultants are quite well known for giving you their very best at the beginning of a relationship and then letting their college interns and recent hires learn at your expense. Always remember that hiring contractors and partners is no different from hiring staff. Unless you are placing a request for something that needs no ongoing support, you are establishing a partnership with people, and you want to be specific about exactly which people you get.

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