Purpose of RFI and RFP, Research Paper Example

The Request for Information (RFI) and Request For Proposal (RFP) are normally associated with procurement searches by the federal, state or city contracts that are outsourcing work to local or national vendors that can provide a service. The procurement process of the RFP received the most media attention to the government bidding process however; there are several industries that rely on the RFI and RFP process such as hotel, healthcare, city, state, engineering industry and educational institutions. The purpose is to create a solicitation environment that allows many different vendors to compete for the contract award. The process is very stringent, long and can be expensive depending on the location and size of project (McMillian, 2013). The purpose is to find the largest pool of qualified applicants to increase the change of awarding the contract to the most qualified vendor.

The secondary purpose is determine which vendors have the experience, record of accomplishment and abilities to handle the contract. The RFI allows the government agency or healthcare organization to look at the RFI vendors for potential award. The RFI is just as advertised” Request for Information” they want more information about the vendor and to determine the interest level of vendors as well. Many companies shy away from the RFI because they believe it is misleading and does not provide enough information to present a good bid as the process continues to the award stage.  The RFP process is the first stage of selection that provides information that is more detailed to the applicants and more financial information that allows the vendors to find out if they can handle the budget. The RFP reaches out to vendors that may have the potential for long-term relationship while providing quality services for the duration of the award. In addition, the RFP can allow the agency to define their needs or adjust the RFP demands to ensure they are presenting a quality RFP bidding process. The ultimately purpose goal of both the RFI and RFP is ensure the best vendor is matched to the best agencies.

The healthcare industry has a similar process that is seeking for the best vendors. In the healthcare industry, there is a define process created to find and identify several vendors that would the best potential partner. In the healthcare industry, a provider such as the State of Georgia is looking for the best administrative healthcare company to manage the benefits paid for the policyholders. The State of Georgia provides limited information without making any commitments to the vendors. The healthcare industry is a big market with hundreds of quality vendors globally. The RFI is designed to gather as much information about the vendor without making any promises that they will win the contract. The RFI is very vague which does not provide much information about the project, however, the RFI is to analyze which vendor has the best experience, capabilities, matching skill sets and their overall years of healthcare experience related to the project.

There are some advantages of the RFI: The vendor pulls is massive with many worthy companies that can do the job, however, the RFI allows the State of Georgia to start the process of eliminating vendors that do not have the experience that matches the State of Georgia needs. Secondly, they do not make a commitment to any potential vendor while they get to review the background, reputation, and experience in healthcare. The RFI process allows the State of Georgia to review the largest population with the best credentials for the project. In addition, the State of Georgia has an opportunity to analyze the vendor up close during the selection process. In the healthcare industry, they must do quality background checks to ensure they get the best vendors with a reputation of success. The RFI process provides the agency with a true interest from the market concerning winning this award. In addition, is a great way for a business to build relationships within the RFI process, which might prove profitable in the future. The RFI process allows all business and small business to apply because there is no cost associated with the RFI except the time.

Third, they do not have to provide any financial documentation concerning the project. Lastly, this process forces the vendor to truly present the companies skill and experience without having a change to tailor the response to what the State of Georgia needs versus meeting the needs of the project. This steps prevents the vendors with the most revenue to buy the bid because they can afford to hire the best based on the needs of the project. The best example is bidding for a housing contract for the city to clean up old houses in the community. The vendor can easily purchase the services of all the best housing renovators in the city while not allowing any fair competition from the small business because they have already cornered the market on housing renovators. The primary reason for the RFI is to gather more information concerning the vendor’s credibility and abilities. The RFI is a part of the initial process in selecting potential vendors during the project-planning phase, which gives very vague undefined objectives. The RFI makes it understood to all the vendors, this process is not an award of the contract just information seeking process. Thus, the Request for Information (RFI) is an open mass vendor inquiry that scans the entire market based on some broad requirements. It is as the name suggests the procurement is utilize to gather information with any commitment or negotiations. However, negotiation is a process further down the initial phase once the field has been selected.

The RFI can be describe as an open solicitation high level sent to a large base of potential vendor to find more information about the pool of vendors such as their motivations for this project, attitude, description of business, past projects, and capabilities match. There are some disadvantages with RFI is the vendors will not apply because they believe it is a wasted process that is so selective they will not have an opportunity to win the bid. There is no implied contract and the potential candidates that provide large amount of information to the RFI process do all the work.  The RFI process is very subjective about choices, comparison and whether they feel, a company is qualified for the project. Another disadvantage is the amount of money the potential spend on developing an RFI presentation.

A Request for Proposal (RFP) is a process that presents a precise range of work to be done and also solicits solutions from vendors. The process has a structured however, strict procurement guidelines for demonstration, timeline, and the length of time it will require to respond to RFP. The RFP assignment provides you with pricing details, unique details, and requirements for the vendor. The advantages of the RFP give the potential client to distinguish themselves from the other competitors while learning more about the project needs. The project process of the RFP is very regimented, structured, and detailed which normally separates the best candidates from the company that may not be qualified to handle the magnitude of the project.

The healthcare industry uses the RFP process to find qualified healthcare providers that have all the necessary skill sets and the complete medical background to handle Managed Care claims. The healthcare industry turned to RFP when they receive literary thousands of vendors with very closely related healthcare skill set. The healthcare industry has found that the RFP process allows them to narrow down the best vendors and with the best past experience which is critical during the RFP process. The RFP process is an important to the procurement process that meets the projects mission.

The RFP traditionally has a specific period to respond at each stage with vendors that are eliminated until they reach a decision on the top vendors that can actual present at a live presentation. This type of procurement solicitation in which a state agency, healthcare organization, or business organizations will use the process to announce the funding available for a specific project. In addition, the vendor can make their competitive bid for a specific project.  Another disadvantage sometimes some of the requirements may be slightly underestimated that causes the winner to spend more on the budget, which is higher than the winning bid. (NorthStar Travel Media, 2014).

The RFP outlines the bidding process and contract terms, and provides guidance on how the bid should be formatted and presented. A RFP is typically open to a wide range of bidders, creating open competition between companies looking for work. A request for proposal RFP is a document that an organization posts to elicit bids from potential vendors, typically for the development of a business component or system or the provision of a business service. For example, a business in the start-up phase or one moving from a paper-based system might request proposals for all the hardware, software, and user training required to establish and integrate the new system into the organization.

In the RFP process, some disadvantages to the RFP make it difficult to achieve the desired result. The best example is the hotel industry that utilizes a new trend e-bidding that allows vendors to bid for contracts online. There are hotel vendors that bid for large blocks of rooms such as cheaphotels.com unfortunately the RFP is deceiving to the vendor. The hotel is not choosing the potential candidate they are choosing the candidate with the best conversion rate (NorthStar Media Travel, 2014). The e-bidding is not a phenomenon because in the RFP process sometimes the scope does not match the true needs of the organization.

The healthcare industry is another example that the bidding processed is flawed. The State of Florida is looking for a vendor to service 1 million lives in Duval County. The scope of the bid is clear they need monthly training sessions for new products for patients, physicians and other healthcare providers. The vendor that was chosen was a local company that did not have the strongest background but they were chosen because of relationships locally. The RFP agency will never admit they chosen the RFP vendor because of their location. The primary disadvantage of the RFP is automatically eliminate the companies that cannot afford a large portion of their budget to get the opportunity just to present their skill set. They are paying the chance to be selected as a candidate. This is not a fair proposition for the small business during this process. In addition, takes time to write a quality response to the RFP, which is always expensive. Not to mention the RFP project is not loyal, if the vendors does not meet their needs or their ideology they can be dropped and they can chose another provider. Finally, the vendors have complained that they spend thousands to present their intellectual property that is protected and their ideas get stolen or duplicated. (Benini, 2002). This is especially alarming to technology companies that have ideas that may be the leader in the market but somehow those ideas get out to the public. In addition, the RFP process is risky because when the top 5 presenters travel to designated for presentation sometimes, they take some ideas and protected intellectually property ideas back to their organization.

There was a study in complete by Lexus Nexus in 2013, that clearly shows that the RFP process is becoming a financial investment. This clearly allows the larger companies that can afford to pay attorneys to help respond to the RFP. Once again, the companies with the most expendable revenues can sometimes buy the bid. Lexes Nexus has indicated that the law firms are getting up to 20 request for RFP support each months, which is 240 request per year. (Acello, 2013). There are other research that indicates that bidding for large state side and international contracts is a big gamble and become a major reason for the demise of small business. The RFP process has been allowed to change the rules that benefit those that have the revenue to meet the demands of the RFP proposal. (Acello, 2013).

References

Acello, R. (2013, February). Bidding time: firms are putting in more hours on RFPs. ABA Journal, 99(2), 26.

Benini, C. (2002, November). RFP overkill? Rampant abuse of the proposal process pits suppliers against planners. (Working with Suppliers). Meetings & Conventions, 37(12), 45+.

McMillan, J. (2013, July). Develop RFPs that produce the best outcomes: a well-designed request for proposal makes it easy for suppliers to give you the information you need to choose the best solution. T+D, 67(7), 78+.

NorthStar Travel Media. (2014). Four local demand factors to consider before sending your RFP. (2014, December). Meetings & Conventions, 49(12), S6.

NorthStar Travel Media. (2014, Dec). Obstacles to RFP responses. Meetings & Conventions, 49(12), S2.