If you’re confused by the various terms used by bid, proposal and tender professionals, and the equally confusing list of acronyms related to procurement process you’re not alone.
The various acronyms used in the procurement process has a lot to do around the buyer’s readiness to purchase.
For example, an EOI (Expression of Interest) – often done in the early stages of the procurement process – may be released if the buyer is searching the market for potential suppliers, or seeking industry input into scoping requirements that will then go back out to market later on.
An RFP (Request for Proposal) is often the next stage in the procurement process where the buyer goes to market for solutions-oriented approaches to service or product delivery. The RFT (Request for Tender) on the other scale is a request to really get a proposal on the table around how you would design a solution or deliver a product or service, but this usually delves further into what you are like to do business with such as seeking information about organisational capability and resources, financial viability, sustainability principles and value adding.
A Request for Tender may not seek pricing initially and may involve several phases of short-listing. A RFQ is a request to provide pricing on a product or service, which is generally not asked for in the early stages of procurement such as a Request for Information. For simplicity the key differences are summarised below:
RFI – Request (or Registration) for information
EOI – Expression of Interest
RFP – Request for Proposals
RFT / RFQ – Request for Tender, Request for Quotation
In summary, Expressions of Interest are useful when the number of players, market size or the approach to solving a problem is largely unknown. Request for Tenders are often used in the major infrastructure and construction industry where solutions to problems are high value, high risk and very specific.
When to use an EOI versus RFP and RFT
In most cases EOIs and RFTs have been pre-designed and specified as a result of significant amount of consultation, engagement and preliminary design work. RFPs on the other hand, provide for greater flexibility. This format is often used in the professional services sector (such as technology, recruitment, environmental consulting and creative industries sectors) where there are many options and a variety of possible solutions. Market-led proposals is a new trend of proactive proposals from the private sector where a commercial arrangement is formed with government to deliver infrastructure or a service to benefit the community.
Collectively the ‘Request for…’ terminology is now referred to as RFx, and in the world of electronic procurement, is known as eRFx. Some terms are used more widely in some countries more than others. In the US, the term RFP is widely used, whereas in the UK the use of pre-qualification questionnaire (PQQ) and invitation to tender (ITT) is more common.There are also different types of agreements including Frameworks Agreements and Dynamic Purchasing System (common across the UK); and Preferred Supplier Lists, Panels, and Standing Offer Arrangements (used in Australia, NZ). These lay down terms, conditions and prices governing future business for particular products or services although they are not guarantees of business.
Common areas of interest
Common areas of interest to tendering organisations include (but are not limited to) include:
- Environmental Management / Sustainability / Sustainable Sourcing
- Equal Opportunities / Diversity
- Corporate Social Responsibility
- Added Value
- Data Protection
- Supply Chain Management
As you can see, tender and bidding processes share a common set of terms. Understanding the different approaches to market and the basic procurement terminology that goes with them will help you make sense of the process, help you reduce the risk of misinterpreting the requirements or making errors in your proposals.