Overview

The most efficient way to collect and organize information regarding the large-scale purchase of telecommunication hardware and software for an organization is with the Request for Proposal.

This can be a chief instrument to ward off inefficient and ineffectual use of telecommunication budgets. The RFP can also help guide an organization away from merely copying the telecommunication implementation of others. 

RFP Implementation

·        The RFP (Request for Proposal) is used with the purchasing decisions of complex telecommunication products and when the need for more than just a price comparison is required.

·        The RFQ (Request for quotation) is issued to buy products from the lowest bidder; it contains only purchase conditions and a simple specification.

·        The RFI (Request for Information) is a simple method to obtain the pricing information of a vendor; it has an outline specification that is used to acquire product as well as pricing information from the vendor.

·        It is to be noted that the RFI does not indicate any intent for purchase.

Facilitation of Selection Process

·        The RFP allows the buyer to organize the responses from various vendors
·        The vendors prepare the responses in the same format and same basis

Multiproduct RFPs

·        The RFP is not restricted to one product all the times
·        A RFP can be written to include multiple products in the same document. (Provided the vendor is in the position to respond to the whole project)
·        If the vendor is not in the above position, then the RFP is split for multiple vendors.

When to use an RFP

Preparing a RFP requires effort, therefore…
·        The product purchased should be either expensive or the quantity should be agreeable.
·        A RFP can be used if the vendors in the market are not familiar.
·        A RFP can be used if the product’s price is very unstable and competitive sources are available.
·        A RFP is also used if more than one type of the product can fulfill the requirement or the consequences of purchasing the wrong equipment are severe.

Avoiding the Risks Involved

Different risks that are to be avoided in a RFP include:
·        Incompatibility - By requiring the vendor to warrant for incompatibility, the risk of the new systems incompatibility with the existing system is reduced.
·        Vendor Stability - By obtaining the historical and financial information of the vendor, the risk of the vendor not performing to the requirements is reduced.
·        System Reliability - Requiring the vendor to provide the systems reliability information and the repair information ensures that availability and system reliability is guaranteed.
·        Obsolescence - By requiring the vendor to give information about the products life cycle and the technology behind it, the product can be differentiated from the obsolete or the new, unproven technology.

Elements of the RFP

Project Description

·        The RFP begins with a description of the organization requesting the service or product and the type of the environment in which the product will be used.
·        All details (including why the changes are required) are specified.
·        The vendor selects the best configuration to suit its needs.

General Information

Information explaining the features of the project is given in this section.
·        The type of system being requested
·        The required completion date
·        Status of supporting facilities such as buildings
·        Networks involved

Boilerplate

·        Refers to the standard information (which is often legal) that describes the buyers purchase terms and conditions
·        Upper management approves boilerplate information
·        Reviewed by attorneys  

Acceptance of Proposal Content

·        Some vendors may refuse to accept the proposal and insist instead on using their standard sales contracts.
·        Sales representatives are sometimes reluctant to agree that their products fail to meet the requirements, therefore…
·        Having the affirmation from the seller in the RFP gives a measure of protection.

Price Increases

·        It usually takes several weeks to get responses from the upper management and vendors to purchase equipment.
·        The vendors should be required to keep their product prices steady during the purchase review period.
·        Most vendors will hold prices for 30 days
·        Although a reasonable clause would be to hold for 60 days, governmental organizations as well as some private companies often need more time.

Performance Bond

·        Mainly an issue of company policy

·        Certain firms may hold up to 10 percent of contract funds for approximately thirty days to unsure the system performance meets the requirements.

Contractor Responsibilities

·        By including this in the RFP, contractors are to be insured for liability

·        Contractor should provide the name of the company as an additional insured, and they are held responsible for all the payments for the subcontractors and obtaining all the permits.

Exceptions

·        The RFP requires that the vendor specify any kind of exceptions that may occur to the RFP in advance

·        Any exceptions that are not specified become the vendor’s responsibility.

Purchase Terms and Conditions

If terms and conditions are not specified in the RFP, then vendor terms and conditions apply. Some examples to be considered are:
·        Warranty
·        Payment terms
·        System acceptance 

System Requirements and Specifications

The requirements and the expectations of the systems are specified in this section.
·        The RFP must clearly specify the mandatory requirements and the optional requirements.
·        It must also make sure that the total cost involved includes the requirements.

Evaluation Procedures

It is a good practice to explain how the responses will be evaluated. This conveys to the vendors some important information on factors that are important in decision-making.

Other Items to be Considered

·        Information request for additional information
·        References
·        Format for the proposal
·        Appendixes that contain the vendor qualification forms 
·        Other information such as the response sheets, etc.

Preparing and Validating the RFP

Preparing the RFP requires effort and experience because a defective RFP can waste the vendor’s time and result in overly expensive purchases.

The RFP is accompanied by:
·        A cover letter that clearly summarizes the requirements and clarifies the return requirements 
·        A deadline for the responses so that time is not wasted

Reviewing the RFP before it is issued to the vendors is very important.

Feasibility and the completeness of the RFP is a must to see:
·        Whether the requirements and the conditions can be met by the vendors
·        Whether the price is within the budget issued·        A vendor conference is also advisable

Alternatives to the RFP

Invitation to Bid

·        This is used in places where the product is a commodity but the sources of the supply are too complex to handle the warranty of a simple RFQ.

·        Most decisions are reached on basis of the lowest bidder.

Favored Vendor

Sometimes purchases are made without considering other vendors if:
·        The existing vendor performs satisfactorily and is meeting the requirements
·        The competition is not high and there are only a few vendors for the product
·        The management policy favors the vendor
·        Compatibility of the competing product is doubtful

Informal RFP

An informal RFP can be used if:
·        The cost is the important criteria for the purchase
·        The possibility of failure is very low in markets of high competition.
·        Good examples are cabling, wiring and connectors.