Request for proposal (RFP)
A formal document inviting suppliers to propose how they would meet a business need, used when the solution and price both need to be compared.
In short
- An RFP asks suppliers how they would solve a problem, not just what they would charge.
- Proposals are scored against criteria set in advance, such as capability, price and risk.
- It suits complex purchases like software, outsourcing or professional services.
A request for proposal, or RFP, is used when a business knows what it needs to achieve but wants suppliers to propose how. It describes the requirements, the evaluation criteria, the timeline and the response format, and invites several suppliers to submit detailed proposals.
RFP, RFQ and RFI
- RFI (request for information): an early step to learn what the market offers and who can supply it.
- RFP (request for proposal): for complex needs where approach, capability and price all matter.
- RFQ (request for quotation): for well-defined needs where price is the main difference.
Running a good RFP
- Define requirements clearly, separating must-haves from nice-to-haves.
- Set scoring criteria and weights before seeing proposals, for example capability 40%, price 30%, implementation 20%, risk 10%.
- Give all suppliers the same information and deadline, and answer questions openly.
- Score proposals independently, shortlist, and hold demonstrations or interviews.
- Negotiate with the preferred supplier and confirm the contract.
Public sector bodies must usually follow formal tendering rules, which set out how opportunities are advertised and how suppliers are selected. In the private sector, the process is flexible but benefits from the same discipline.
Worked example
Choosing an expense platform
A 600-person company issues an RFP for expense software to five vendors, scoring capability 40%, total cost over three years 30%, implementation 20% and security 10%. The cheapest vendor scores lowest on capability; the winner is second on price but first overall, and the negotiated three-year cost ends up 11% below its initial proposal.