DEFINITION

A Request for Proposal (RFP) is an invitation for suppliers, often through a bidding process, to submit a proposal to provide a specific product or service. It is intended to provide the supply side company with the necessary information needed to submit a comprehensive and definitive approach to sourcing some part or all of the training function.

OVERVIEW

A bidding process is one of the best methods for leveraging a buying company’s negotiating ability and purchasing power with suppliers. The RFP is the most important and widely used document in the proposal stage of that process regarding training outsourcing. The ultimate objective of the RFP process is for buyers to ensure they are getting the most value for the services and products they seek to procure.

The RFP is usually a lengthier process than the RFI (request for information) and the RFQ (request for quotation). Typically 10-20 pages in length, it brings structure to the procurement decision and allows all risks and benefits to be identified at the outset. Of course, the length of the RFP is dependent on the complexity of services being procured.

The higher the quality of the RFP, the higher the quality of proposal you should expect to receive from the supply side company. Effective RFPs reflect the buy-side company’s strategy and short/long-term business objectives, while providing detailed insight upon which suppliers will be able to offer a matching perspective.  Input from a spectrum of functional experts ensures that the chosen solution will suit the buyer’s specific requirements.

The document includes an executive summary, a detailed description of the process(s) to be outsourced, volume and value metrics of operations for the past 1-3 years, specific process and performance expectations of the outsourcing supply partner, a responsibility matrix defining expected responsibilities of both the demand side and the supply side companies, and proposal guidelines to be followed by each.

It is in the interest of both parties to avoid misunderstandings. For example, if the potential provider misunderstands the parameters set forth in an RFP, then the proposal may come back with provisions that are either misaligned to the buyer’s needs, or a price point that is either too high or too low. It could also contain solutions that either don’t meet or “over meet” the buyer’s objectives.

Misunderstandings could also deter well qualified providers from participating entirely. And, worse, they could cause future contractual problems when disputes over contractual language arise. The worst result of a poor RFP document is that the most qualified and valued suppliers choose not to participate because they fear too much risk due to the vagueness of the RFP and uncertainties of expectations. The RFP is the opportunity for you the buyer to ‘sell’ your company as a valued business partner and client well worth the supplier’s best solution and pricing package.

BEST PRACTICES

Numerous RFP best practices have been identified by surveys, studies and practical experience of outsourcing parties. Here are some to consider.

  • Begin with an assessment. Of the Seven Stages of Training Outsourcing, the proposal stage is Step #2. Step #1 is a thorough assessment of the organization’s existing training operation and its sourcing needs. A professionally conducted assessment is critical for establishing baseline measurements for future progress within the training organization, and for identifying all learning-related needs. You cannot identify and measure future training success without first conducting an internal assessment.
  • Provide the basics. RFPs must provide three pieces of information: the buying company’s precise training process needs, the circumstances under which the vendor’s services will be needed, and how the buyer expects delivery.
  • Be specific. Specificity is needed to ensure that all vendors participating in the RFP process will be bidding on the same activities. That enables the buyer’s team to make accurate comparisons among proposals.
  • Don’t over-do it. RFPs should be sufficiently detailed to explain the job, but no more. Buyers should remember that they are also selling themselves as a considerate and reliable partner, one who respects a supplier’s valuable time. Volume-based metrics are helpful: the volume of expected activity, the number of people involved, the number of courses, expected demand and locations are valuable pieces of information.
  • Follow a format. RFP lengths vary depending on complexity. Key ingredients should include an executive summary, a detailed description of the process to be outsourced, specific process and performance expectations of the outsourcing supply partner, a responsibility matrix that defines expected responsibilities of both the customer and supplier companies, and proposal guidelines to be followed by the proposing companies.
  • Omit pricing information. High level pricing information is generally solicited in the RFP, although specific pricing for contracting is generally not valid at this stage.  In fact, pricing information contained in the RFP has absolutely no validity, and should not be considered relevant. The reason is because prior to the negotiation of specific responsibilities of each party in the engagement, specific pricing is irrelevant.
  • Ask questions. Many questions for vendors will pertain to the requirements of the company and the engagement. It is also important to ask about the provider’s business – current clients, scope of work, geographic range, number of employees, number of employees who would work on the buyer’s engagement, and the ability to meet deadlines.  In short, buyers should seek information they need to make certain the partnership will work.
  • Be cost conscious. Remember also that there is a cost to the supplier to prepare responses. The more you ask of the supplier during the request process, the more cost you add to their business – costs they will need to add into their pricing models. Requesting information that does not add value to your business only adds cost and sours the relationship. Give the supplier appropriate time to respond. Supplier’s responses to RFPs generally include detailed solutions and approaches to help your business improve. Suppliers need ample time to develop and work through solution ideas. It is recommended that two weeks is the minimum amount of time expected for a supplier to respond to an RFI. More standard time frames are three to four weeks, although they could be longer depending on the complexity of the engagement and the amount of information requested.
  • Schedule a vendor review meeting. A timely meeting gives participating suppliers an opportunity to raise questions related to the RFP. It is normally held within one week after receiving the RFP, and at least one week prior to the proposal due date.
  • Request non-disclosure agreements. Remember that both parties are providing proprietary information, and both have vested interests in ensuring that it remains confidential.

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