Creating a well-written Request for Proposal (“RFP”) takes a lot of time and effort. And while it can be tempting to rush through the RFP writing process, don’t do it.
A good RFP (and associated evaluation process) will not only help you identify the right vendor and solution, it will also allow you to flush out potential third-party risks and remediation issues before you enter into a contract. Your RFP will:
- Ensure clarity around requirements of what you need, and expectations between you and the vendor
- Improve the accuracy and completeness of proposals and statements of work
- Tease-out issues and potential risks early on in the process
- Make it easier for you to evaluate vendors and solutions by ensuring you have the relevant information you need and make an apples-to-apples evaluation
In most cases, you’re doing RFPs when you have more complex, costly and/or mission-critical services or solutions you need to buy. The biggest risk you have with these types of procurements is that the third-party vendor doesn’t deliver. A poorly written RFP dramatically increases this risk. Some of the reasons why can include, among other things:
- incomplete or inaccurate technical or functional requirements,
- unreasonable delivery timelines,
- unclear roles and responsibilities,
- and vague or inconsistent evaluation factors.
Get one of these wrong in your RFP and you’re likely to have a problem. Get all of them wrong and you’re at high risk for a major vendor failure.
Some people think that the longer the RFP the better. That’s a bad approach. It’s not about the quantity, but the quality. I actually recommend shorter RFPs that are substantive yet concise, and easy for the vendor to understand. Regardless of the size of your RFP, there are eight sections it should contain.
- Executive overview – frames the purpose and objectives for the procurement.
- Company background – provides the vendor with context about your organization.
- Functional, technical and business requirements – details everything that the vendor and/or solution needs to do.
- Pricing information – defines all components and your preferred pricing structure (i.e. fixed fee, cost reimbursable, etc).
- Deliverables and timelines – outlines what you expect to be produced and by when.
- Responsibilities of both parties – clarifies the role your team will play and what you expect of the vendor.
- Evaluation process and key factors – establishes how you’ll evaluate proposals and what factors are most important to you.
- Guidelines for proposal submission – makes it easier for you to compare apples-to-apples.
One other piece of advice: share your standard terms and conditions up front along with your RFP. Doing so:
- allows you to communicate your risk mitigating terms and conditions early on so you can identify any potential deal breakers before you get too far down the road;
- gives you leverage in the contract negotiation process; and
- peeds up the contracting process when/if you get there.
Stop sleeping on your RFP. It is a critical tool for reducing risk with your third parties before you enter that contract and it’s too late.