RFP vs RFQ vs IFB vs ITT: Which Procurement Document Should You Use?
Four acronyms, used loosely, and the differences between them decide what comes back from the market. The choice is not a matter of house style: each document asks suppliers for something different, and asking for the wrong thing produces responses that are perfectly compliant and useless.
The procurement appendix of the PMBOK® Guide Eighth Edition, Appendix X4, covers this territory, and one question sorts most of it: how completely can you describe what you want?
What each one asks for
A request for information asks the market to educate you. It is not a solicitation, no award follows from it, and its purpose is to find out what exists, who supplies it and roughly what it costs before deciding how to buy. Issued honestly, it saves a great deal of wasted effort later; issued as a disguised tender, it burns supplier goodwill quickly.
A request for quotation asks for a price against a description you have written. It suits standard goods and well-defined services where the only real variable is cost, and it works because the buyer has already made every decision that matters. The quotes are comparable because they are quoting the same thing.
An invitation for bid or invitation to tender asks for a complete offer against a full specification, usually with a formal submission process and a defined award basis. The terminology varies: invitation for bid is the more common form in North America, invitation to tender in the United Kingdom and much of Europe, and public sector rules give both a specific procedural meaning. The common feature is that the buyer has specified the solution and the bidders are competing on how well and at what price they can supply it.
A request for proposal asks suppliers to propose an approach. The buyer states the need, the constraints and the outcome, and the bidders explain how they would meet it. Evaluation covers method, team, risk and price together, which is more work for everybody and is the only sensible route when the buyer genuinely does not know the best way to solve the problem.
The choice is about how well you can specify
Specify the solution and ask for a price. If you can describe the thing precisely enough that two suppliers would build the same item, a quotation or a tender is the right instrument and anything more elaborate wastes everybody's time and money.
Specify the need and ask for approaches. If reasonable suppliers would solve the problem in different ways, and those differences matter, a proposal process is the only one that lets you see them. The cost is real, in bid effort and evaluation time, and it buys information you cannot otherwise get.
Four prices for four different services
A shared services centre was outsourcing part of its payroll processing. The commercial team issued a request for quotation, because the procurement route in that organisation defaulted to price competition, and because payroll felt like a standard service.
The specification described the volumes, the pay frequencies and the statutory requirements. It did not describe, because nobody had decided, how exceptions would be handled, what the escalation path would be for a missed payment, or whether the supplier or the centre would own the relationship with employees who queried a payslip.
Four submissions came back, wrapped and squared on the side table, of almost identical thickness. The prices differed by about forty per cent. The reason was that each bidder had made a different reasonable assumption about the undescribed parts: one had priced a full employee query service, one had priced no query handling at all, and two sat between.
The comparison was meaningless and the evaluation could not proceed. Rerunning the exercise as a proposal process, with the need stated and the bidders asked to describe their exception and query handling, took eleven weeks and produced comparable, understandable offers. The eventual award went to the second-cheapest of the original four, whose proposal described a model the centre had not considered.
The eleven weeks were the cost of issuing a price request for something the buyer could not fully specify. Deciding that earlier would have taken one meeting.
Practical cautions
Terminology varies, so define it. Organisations, sectors and countries use these words differently, and public procurement rules attach specific meanings. Stating what you mean by the document you are issuing, in the document, prevents a class of confusion among bidders who work across several markets.
Do not blend the formats. A price request with an evaluation matrix for method, or a proposal request with a mandatory price format that leaves no room to describe an approach, produces submissions that satisfy neither purpose. Choose one and be consistent about what bidders are competing on.
Respect the cost of bidding. A serious proposal costs a supplier real money, and asking six bidders to produce one when you have already decided, or when only two are credible, damages your standing in a market you will return to. A short list drawn from a request for information is the courteous and effective route.
For a PMP® candidate, the practical reading is that the document follows from how completely the requirement can be specified, so a scenario where bids cannot be compared is describing a mismatch between the solicitation and the need. A response that normalises the prices is repairing a comparison that was never valid. Procurement situations where the requirement is understood loosely and the route has already been chosen get close attention in a structured PMP exam preparation course.
Before the next solicitation, write the requirement down and hand it to a colleague who knows nothing about it. If they can tell you precisely what would be delivered, ask for prices. If they ask you three questions you cannot answer, those questions are what a proposal process exists to explore.
Interested in going further?
The instrument you choose decides what the market can tell you, and it is chosen before anybody has seen a bid. Omega's PMP® Exam Preparation works through procurement routes as decisions about what you can specify.
Solicitation routes and procurement documents are covered in the appendices of the PMBOK® Guide Eighth Edition.
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References
A245: Make or Buy? How to Decide Before Procurement Begins
A246: Procurement Strategy: Decide How You Will Buy Before You Go to Market
A248: Choosing a Supplier: Cheapest Is Not the Same as Best
A249: Fixed-Price vs Cost-Reimbursable vs Time-and-Materials Contracts
A250: Outcome-Based Contracts: Buying Results Rather Than Activity
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