5 Tips for Understanding A Request for Proposal (RFP) for a Contract Bid
Companies actively engaged in the contracting process must become familiar with requests for proposal (RFP), as many businesses and particularly government agencies utilize these documents to solicit contracting partners. The key to winning many government contracts, which can prove to be quite lucrative especially for smaller businesses, is putting together a strong response to an agency’s RFP. Here are some tips for understanding a typical RFP for a contract bid:
Identify Price or Cost Parameters
Although an RFP must be evaluated in its entirety, many companies have a minimum price point that they are able or willing to accept for their particular good or service. For this reason, it may be wise to first identify the maximum price that the company or agency is willing to pay, as hopefully outlined in its RFP. Even if the RFP does not specify the price it will pay, there may be an explicit cap on the overall allowable cost for the contract as a whole. If this is the case, companies must carefully analyze whether they can work within the confines of any such parameters. It would be a tremendous waste of time and energy to respond to an RFP if the financial component will not work for both parties as it is specifically spelled out in the RFP.
Determine Number and Frequency of Deliverables
In addition to ensuring that a company is willing to accept a particular price point, it is imperative to determine the type, number, and frequency of deliverables that will be expected over the life of the contract. For some small and even mid-sized companies, the expected deliverables may simply exceed a company’s capacity. It is still all too common for companies to enter into a contract with an unrealistic view of their abilities, which may well lead to some type of breach and costly dispute. When examining any RFP to determine whether to respond, a company must take a hard look at its operational capacity to ensure that it can meet the outlined requirements.
Examine Contract Length and Level of Effort
Sometimes an RFP will seek a contracting partner for a specific project that is not necessarily time bound, whereas others will seek a contracting relationship for a predetermined period of time. In many cases, a company’s ability to perform as explained in an RFP is dependent on the number and frequency of deliverables as well as the anticipated length of the contract. Given that many companies enter into various contracts with several or many other partners, it is helpful when an RFP provides an estimate of the level of effort that the contract will require. This is generally given as the total hours expected over the life of the contract or perhaps a certain number of hours that will likely be needed on a weekly or monthly basis. The deliverables, length, and effort may be doable under some circumstances or at certain points of the year, but companies do not want to get stretched too thin so the timing may not always be right.
Look for Special Conditions or Notices
A detailed and well-written RFP can help eliminate futile contract negotiations and drafting. This is because many companies and agencies that solicit contracting partners via an RFP take the opportunity to include special requirements or conditions and/or give notice to prospective responders if there are any unique facets of the deal. It is crucial for companies contemplating submitting a response to an RFP to read carefully to determine whether there is such language included in the RFP. In some cases, there may be conditions that do not align with a company’s abilities.
Understand the Method of Evaluation for Responses
To ensure the best chance of winning a contract bid, the response to the RFP must conform to any specified requirements and should be written in a way that takes into consideration the method by which the responses will be evaluated. Most RFPs will make it clear how the response to an RFP will be reviewed and rated. Thus, the companies responding must strive to tailor their responses with these evaluation metrics in mind. The company or agency that puts out the RFP will no doubt discard any responses that clearly disregard the RFP’s requirements and evaluative factors.
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