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Request for Proposal (RFP) vs. Invitation for Bid (IFB)

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Request for Proposal (RFP) vs. Invitation for Bid (IFB)

This webpage has been drafted around a school’s need to use a Completive Negotiations (a.k.a. Request for Proposal (RFP)) and how a RFP will differ from a competitive Sealed Bidding (a.k.a Invitation for Bid (IFB)) to procure a good or service.

Why use a RFP in the first place? – The main reason lies in the fact that some solicitations, generic specifications may not be available or prove too difficult to draft. Furthermore, the use of a conventional evaluation based solely on price for awarding a contract may not get the product or service required. Many complex products and services cannot be obtained by conventional bidding based solely on price. This is the reason why a school may choose an RFP over another form of procurement such as an Invitation for Bid (IFB).

Why not an IFB? – An RFP is a great tool for schools to use in soliciting proposals from vendors for products and services that cannot be evaluated by cost alone. Moreover, if the school is planning to award a cost reimbursable contract, then the school is required to use a RFP.   

What’s the difference? – An IFB is used when there is no substantive difference among the products or services that meet specifications so that the only difference among responsive bids is price. An IFB differs from an RFP, which is used when price is only one of the criteria that are needed for evaluating offerors.

For example:

  • IFB may be used when you know “what” and “how”
  • RFP may be used when you know “what” but not “how” or “how” may vary from one vendor to another

An IFB can only result in one of the following types of fixed-price contracts:

  • a firm-fixed-price contract,
  • a fixed-price contract with economic price adjustment, or
  • a fixed-price contract with prospective price redetermination.

An RFP in addition to the above can also result in a cost-reimbursable contract.

Once the IFB is developed and written, the IFB is advertised to the public, bids are publicly opened, and the award is publicly announced. The public announcement and opening are very important phases of the sealed bidding process, as they are critical to ensuring that the procurement occurs on a level and fair competitive playing field. Negotiation is not normally used with competitive sealed bidding. The IFB is evaluated according to costs; IFBs are best used when no negotiation is required among responsive bidders, and the contract will be awarded solely on the basis of price.

Regardless of which type of formal procurement tool is used, RFP or IFB, the solicitation document must outline all the requirements for the products and services that the school would like to procure. This can be achieve by describing the purpose, scope, description, minimum requirements or expectations, qualifications or capability of the distributor or vendor, evaluation criteria, and other requirements.

As for the RFP it is evaluated according to predetermined weighted standards (i.e. points) that are stated in the RFP itself. The price will need to be the highest weight criteria. After evaluation, discussions with qualified distributors may be allowed to explain or clarify proposals and for a “Best and Final Offer.”  After completion of the RFP process negotiations may, in some circumstances, be utilized to secure more advantageous terms or reduced cost.

Unlike the IFB, the RFP allows the schools to negotiate with respondents to its solicitation, and thus provides more flexibility in the awarding of the contract. 

An RFP must, at a minimum:

  • state the purchasing school's need using clear and well-thought-out specifications that are not overly restrictive,
  • specify the anticipated terms and conditions of the contract,
  • provide information that the respondent must include in its proposal,
  • identify each factor that the purchaser will use to evaluate the proposals and award the contract,
  • describe how technical and cost factors will be considered in making the final determination of which respondent will receive the contract [i.e. the relative importance (or "weight") of each factor in the award of the contract], and
  • state that the award will be made, on the basis of price and other factors, to the responsive and responsible firm or individual whose response is most advantageous to the purchasing agency, after price and other factors have been considered.

As with an IFB, the RFP must be announced to the public via news sources that allow the school to reach as many potential respondents as possible, and specifies a due date. All interested parties may then submit proposals. However, unlike what occurs when using an IFB, there is no public opening requirement of the proposals received for a RFP.

Why is there no public opening of the proposals received by the letting of a RFP? – Because receipt of the proposals is, under the RFP method, only the first step, not the last step, leading up to the award of a contract. Other steps, such as evaluation of the criteria for the technical and cost factors, must be taken before the school can award the contract.

With that said when schools use a RFP, they should have a fundamental understanding of:

  • how to establish criteria for evaluating the factors that will be considered in determining which offeror will receive the contract, and
  • how to assign scores accordingly.

The schools should also be careful because while cost should be the primary factor:

  • too little weight on the cost may result in a strong technical proposal winning the contract, no matter how high the cost, and
  • too much weight on the cost may result in a low bid winning the contract, no matter how poor the technical proposal.

RFP: Negotiation – When schools use a RFP, school may need to negotiate with the offerors regarding their respective proposals.

This training only covers developing a formal procurement solicitation and not negotiations. However, here are some “do's" and "don'ts" that the schools can follow?

Do’s and Don’ts of Negotiation

Do

Don’t

  1. Be well prepared and have a plan with goals.
  2. Identify each point to be negotiated.
  3. Establish parameters of discussion for each point.
  4. Identify important issues first
  5. Try to settle one point before moving to the next.
  6. Discuss budget limitations, policy, regulations, and restrictions related to the program.
  7. Be prepared to discuss alternatives.
  8. Avoid arguments.
  9. Be patient and stay away from quick deals.
  10. Be ethical, fair, and firm.
  11. Control the negotiation session.
  1. Underestimate the ability of the vendor.
  2. Disclose the specific contents of other proposals.
  3. Negotiate areas beyond the scope of the RFP.
  4. Make a concession without obtaining a concession.
  5. Accept the first no.
  6. Be unreasonable or unfair.
  7. Negotiate to the point that the price is no longer fair and reasonable