RFQ vs RFP: Understanding the Difference

To best increase your odds of winning a government contract, you have to understand the game and know the difference between RFQ vs RFP.

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RFQ vs RFP—which should you choose? Did you know you might not need either of these requests? You might need an RFT or an RFI instead.

But how do you decide? Below you’ll find the answers to all your questions. When you’re ready to discover which request you need for your specific situation, read on.

What is RFQ?

A request for quote (RFQ) is a document used to gather information about the types of goods a potential vendor offers. The document is used to express a company’s interest in procuring these goods. It details the quantity and type of goods to the vendor.

A company sends the RFQ to companies with which they’d like to work. It’s a way of sending out feelers. Vendors that are interested respond with quotes and price estimates.

Then the company selects from the diminished list of vendors. It compares prices and products to find which vendor best fits its needs. Companies usually restrict the use of RFQs to large scale purchases.

RFQ Example

The committee running the Macy’s Thanksgiving Day Parade decides to sell turkey memorabilia this year. They calculate they’ll need 10 thousand cases of gobbler hats. They send RFQs to the 7 suppliers large enough to fill their orders.

They’re looking for the best quality hat for the best price. In response, only 5 suppliers reply with prices and specs. Of those, the committee chooses the best quality hat which also happens to be the least expensive hat.

Note: a similar document also uses the same acronym, RFQ. In this case, it stands for “request for qualifications.” This document is used to query vendors or contractors about their qualifications.

What is RFP?

A request for proposal (RFP), is a document used to gather information on the services offered by contractors. They’re less straight forward because the subject matter is more complex.

The company is no longer asking for a simple price list. It’s asked for a detailed outline of the services the contractor or supplier offers. Included are the nature of the project as well as the project’s goals.

In the RFP, the company must clarify the scope of the proposal they want. They must give directions on the following:

• The number of pages
• The number of illustrations
• The laws governing the project
• The qualifications contractors need

Most proposals include additional directions which change on a case by case basis. In return, contractors reply with their own set of details:

• The estimated cost of management
• The estimated cost of labor
• The total project cost
• Any additional fees
• Additional requirements needed to complete the project

After the company sends out the same proposal to a shortlist of prospects, it waits for their replies. Then it can decide which contractor is the best fit. But what happens when an uninformed company doesn’t know which questions to ask?

Uninformed companies can send RFPs to veteran contractors and ask for guidance. It’s a regular practice, especially with complicated or high-end products or services.

RFP Example

A local YMCA finally raises the funds for a much-needed indoor pool. They must hire a contractor with the knowledge and experience to build their 660-thousand gallon Olympic-size pool. The contractor must also build the structure around the pool and match it to the existing buildings.

They send RFPs to 4 contractors including the nature of the project. They also explain the local laws and building regulations governing the installation of such a pool in a high traffic area. They include a shortlist of supplementary questions at the end.

3 of the contractors respond with lists of estimated costs. They also include anticipated start dates and project timelines. The YMCA chooses a winner from contractors that responded.

The gap in effort between RFPS and RFQS is wide. It’s one of the reasons that companies complete RFQs on their own but often utilize an RFP tool. These types of software reduce the workload and give uninformed companies a template from which to work.

RFQ vs RFP

As you can see, the contrast between the RFP and RFQ is great. If you’re uncertain, think about the complexity of your project. The difference between RFP and RFQ is that of scope.

If it’s a simple project, it’s RFQ. If the project involves questions about experience, licenses, laws, and regulations, it’s RFP.

What is RFT

You should be aware that a few types of other, less common, requests exist. The first is the request for tender (RFT).

It’s used when a company knows exactly what supplies or services they want. What they need are bids from suppliers or contractors. The company also needs to ensure these bids are fair and free from bribery and nepotism.

State and federal governments often use RFTs because they’re required by law. They safeguard against unfair advantages and closed-door negotiations. To protect against preferential treatment, an evaluation team reviews the bids to decide who gets the contract.

RFT Example

The California Highway Patrol has money in its coffers for 2000 new tasers this year. It sends an RFT to 6 suppliers across the country. In it, they detail the specifications of the type of taser they need.

The exact same RFTs are sent out to the suppliers at the same time to ensure no unfair advantages.

In return, the suppliers send back their bids for the crates of tasers. These bids are reviewed by a team of evaluators. The supplier offering the lowest bid wins the contract.

What is RFI

A request for information (RFI) is used when a company needs to gather information. It needs to make a decision but needs information before it can decide which path to take. It’s often sent out to a broad selection of potential suppliers.

It’s used to pick their brains so the company can choose a direction. Goals include:

• Building a database
• Preparing for RFPs, RFTs, or RFQs
• Conditioning suppliers’ minds
• Developing a strategy

The advent of the internet has given suppliers the ability to post most of this information online. It’s made many types of RFIs either less time-efficient or altogether redundant. In other words, it’s often easier to simply look this information up online.

RFI Example

The Birkenstock shoe manufacturer is deciding on a new line of suede sandals this year. They’ve developed the prototype, but they’re not sure what type of rubber to use for the tread. They want something different from last year’s model.

They send out 36 RFIs to rubber suppliers. In them, Birkenstock outlines its problem and ask for options. The rubber suppliers respond with a variety of possibilities.

Birkenstock uses this information to generate a database and develop a list of benefits and drawbacks. They run that list through a panel and choose a direction for their new line of sandals. Lastly, they send out RFPs to a shortlist of 3 rubber suppliers.

Which Request if Right for You?

Each request is used for a distinct purpose. If you’re still confused which request you need to use, ask yourself the following questions:

Do you know which questions you need to ask your vendor or contractor?

• Are your questions general or specific?
• Have you already created a shortlist for your vendors or contractors?
• Do you need to use a formal RFP process to bid out the project?
• Would you like vendors to make suggestions or do you already know what you’re looking for?

Hold a meeting with your board or committee to formalize your questions before you begin.

A Snapshot of the Differences

Here are the Cliff Notes for your request options:

Request for Quotation (RFQ)

Purpose: Used when you know the reason and purpose of what you want, but you need to explore the financial details.

Questions: designed as a query to probe cost requirements.

Style: structured; less flexible.

Advantages: built so buyers can focus on price, all distractions stripped away.

Request for Proposal (RFP)

Purpose: used when you want to shop around, evaluating all the factors before making your choice.

Questions: designed with detailed, specific questions focusing on products, services, and business.

Style: formal; direct.

Advantage: gives a transparent comparison of a vendor’s offers and their capabilities.

Request for Tender (RFT)

Purpose: used to solicit offers from suppliers for services and discourage closed-door negotiations.

Questions: designed to pin down bids from suppliers.

Style: formal; structured.

Advantage: ensures there are no unfair advantages for suppliers bidding on the project.

Request for Information (RFI)

Purpose: Used when you want information, but you don’t know which solution can solve your problem.

Questions: designed to educate and inform.

Style: casual; asking for help.

Advantage: fast; discover the next step to meet business needs.

What’s Next?

Now you know it isn’t a simple battle of RFQ vs RFP. If you’re sending out requests, you might also need an RFT or RFI. Write out your list of questions and cross-reference it with the Cliff Notes above to decide.

If you’re an entrepreneur building your business, shoot over and browse our gigantic library of other helpful articles. So long and good luck!