Know the Difference
Renee Milton is CEO/Founder of Government Procurement Solutions, a company dedicated to helping businesses understand and achieve government work. She is a proposal consultant and 20 year veteran of local government contracting as a buyer for the City of Chicago and Cook County.
Everybody’s heard the saying “if you don’t know you better ask somebody”. As a buyer, I would always tell vendors trying to get government work to understand what you’re submitting and know how to approach the solicitation. So if you haven’t bothered to ask, here’s the some information that may help you the next time you see a solicitation.
In the world of government contracting knowledge is power, and it is crucial to know the “what” of the bid opportunity that’s landed on your desk. Although getting your company’s name in front of government officials can be challenging, it’s important to understand the process and the motivations involved in a solicitation. Cities, Counties, and local government entities are like any household. They get money in, and they want to spend it in a way that is economical. They have needs on one hand, and they have a wish list on the other. Any person can relate to seeing a nice, shiny car at the dealer, and you wonder if you can afford it with all the bells and whistles, just the way you’d want it. Government struggles the same way when they go to the streets looking for suppliers for goods or services. Public officials look for not only the lowest price but the best value for their buck. Whether the solicitation is a bid or an RFP, the value of what they are getting is still is the name of the game.
This article will explain the differences between three types of government solicitations (RFP, RFQ, and IFB) and what should be your approach to each one. You have to be careful because unfortunately some government offices that offer solicitations still do not understand the difference between solicitations and mix them up or use these terms loosely.
Something I’ve had to explain on a regular basis to both government officials and vendors is that a bid or an IFB (Invitation for Bid) or in Canada an ITT (Invitation to Tender) is not the same as an RFP or Request for Proposal. These are formal terms that in everyday practice lose their distinctions.
The government uses bids when it can fully specify the details of the product or service they are trying to acquire. They know the color, dimensions, make, model and product number, or in the case of services, they know the credentials the provider must have to perform the needed services: 5 years in business, proper certifications, and credentials. Once the bid is opened, the lowest price wins and the bid document is made into a contract for signature, only after, all signatures and approval documents are received.
Often vendors want to negotiate the make and model or other items on a bid, or they believe that another product will save the public entity money. However, once the clock has begun on procurement, it’s tough to convince anyone to make that change. Keep in mind that before the solicitation was put out for bid, a lot of administrative expense and approvals were into the process. Therefore, public officials are reluctant to make changes in the middle of the stream. These only serve to irritate the buyers and department staff who at this point have little incentive to cancel the process or adjust it, when they are often already behind time in needing the commodity.
In a bid situation, the lowest responsive and responsible bidder is the issue. Those terms are two critical industry terms in government contracting. Responsive, meaning that you have responded to all of the criteria, forms, documentation and signatures requested in the solicitation. It is simply a checklist of items that the vendor is asked to submit inside their bid package. Once met, the government entity then considers your bid responsive. There is also the hurdle of being declared responsible. Responsible Bidders are ones that meet the financial capability criteria of the public entity.
RFP (Request for Proposal)
RFP (Request for Proposal) is a solicitation based on the best value offered by the vendor for the need expressed in the specifications. The government may give you operational information, such as how their department is run, the history of the need, the business processes, what their project managers or department heads consider criteria particular to the project, and a pricing proposal form. Your RFP package becomes your entire offer to the government, so be precise about pricing and value added items that you feel will make your submission stand out.
It is good to know the policy of the procurement office you are submitting to because each office has their own flex on what they consider responsive. Why? The price is not the entire issue here. The buyer may contact you as the vendor, to cure minor deficiencies. Therefore, once you submit an RFP be easy to reach! Just in case, be ready to clarify your offer, and be willing to do a formal presentation of your RFP. Here, evaluation and scoring of your proposal is the most important part of the process.
Request for Qualifications or RFQ
A Request for Qualifications (RFQ) has no pricing or money involved initially but can lead to serious money. So don’t ignore these requests they can grow into a long-lasting supplier relationship between your company and the public entity. In this situation, the government may be seeking a pool of vendors or they may choose one vendor and go straight into a contract, or they may connect it to two-step process requesting pricing after a selection based on the qualifications. RFQs ask the vendor to match the skills outlined in the solicitation. RFQs rest on evaluations, responsiveness checks, and responsible determinations very much like RFPs, but pricing is not part of your submission and is usually discussed at the contract level.