Procurement Requests - What do all those acronyms mean?

As organizations look to incorporate more technology, they often look to the vendor community for options. For many the purchasing process often requires that they follow complex procurement guidelines. This is especially true for large organizations and those who rely on public funding. Procurement policies govern the way that companies acquire goods and services. They may necessary for all purchases, or only those of a certain type, or over a certain dollar threshold.

Procedures are in place to ensure the process is competitive, efficient, transparent, and ethical. They help to make certain the process is fair and the purchaser can get the best solution for their organization in an open marketplace.

Depending on the size and complexity of the organization, there may be a dedicated Procurement team in place. Even with this, it is important to consult clinicians and IT staff to assist with defining the solution requirements. They can also help articulate the problem/need for the vendor community. If you do not regularly take part in procurement activities, the process itself can be overwhelming. A lot of work goes into each request that goes out to market …. There are also quite a few request types that can add to the confusion.

I am not an expert on procurement by any means, but I have participated in quite a few cycles with various organizations. One of the first things I found helpful was to understand what all the different request types were. Along with when and why they would be used. Here are the definitions, as I understand them:

Request for Information (RFI)

Organizations will issue an RFI when they do not have enough detail to write a more detailed procurement document. The goal is to understand more about the capabilities and products available to resolve an issue or need. RFIs contain a description of the situation along with categories/high-level questions for vendors to respond to.

• Part of a multi-stage procurement process. (You may use information for a later request opportunity.)
• Issuing organization is able to define need but is looking for solution options from the vendor community
• RFI responses are reviewed, in detail, but not formally evaluated
• A contract is not awarded off of an RFI.

Request for Expression of Interest (RFEI)

An RFEI is sometimes called Expression of Interest (EOI). Organizations use them to gauge interest in the vendor community about a pending opportunity. This process allows the organization to gather information on vendor qualifications and capabilities. In some instances, it is used as an advance notice tool. Allowing vendors to organize into bidding groups for an impending large-scale procurement. The RFEI process does not pre-qualify respondents for later rounds.

• Part of a multi-stage procurement process. (You may use information for a later request opportunity.)
• Issuing organization is able to articulate need and identify some purchase criteria. They are seeking more information on solution options from the vendors.
• RFEI does not pre-qualify/short-list vendors for subsequent opportunities.
• RFEI responses are reviewed, in detail, but not formally evaluated
• A contract is not awarded off of an RFEI

Request for Qualifications (RFQ) / Request for Supplier Qualifications (RFSQ)

An RFQ/RFSQ round pre-qualifies vendors for a complex or large-scale opportunity. The request document defines the minimum requirements and qualifications vendors must meet. The issuing organization evaluates respondents with the intention of short-listing. Evaluation categories may include:  personnel, capabilities (for technology and equipment), proven performance, and financial stability. An RFSQ round should improve the efficiency of later opportunity rounds.

• Part of a multi-stage procurement process.
• Issuing organization is able to clearly define need and required qualifications for the vendors
• RFSQ pre-qualifies/short-lists vendors for a subsequent opportunity.
• Responses are formally evaluated.
• A contract is not awarded off of an RFSQ

Request for Quote (RFQ) / Invitation to Quote (ITQ) / Invitation for Bid (IFB)

Before issuing an RFQ details must be clearly defined for all deliverables. The purchasing decision for these request types is only based on price. These are best for standardized products and services that are consistent. RFQs contain information on item specifications, quantity, timeframe, terms, etc.

• Issuing organization defines precise details on requirements and criteria
• Responses are evaluated on price.
• The organization will usually award a contract following an RFQ/ITQ/IFB.

Request for Standing Offer (RSO)

An RSO is used to identify vendors who can provide product(s) and/or service(s) on an ‘as needed’ basis. This process focuses on the establishment of an agreement. Terms and conditions are set forth along with pre-arranged pricing details.

• Issuing organization can clearly define need(s) and identify detailed criteria for purchase
• RSO responses are evaluated.
• The standing offer itself is not a binding contract. The formation of a contract occurs each time the purchasing organization issues a ‘call-up’ for the product(s) and/or service(s).

Request for Tender (RFT)

An RFT is an open invitation to suppliers to respond with their ability to meet the needs of a detailed tender. The issuing organization provides detailed information on the company need(s). As well as on the solution requirements that are sought. With an RFP, there is a commitment to purchase.

• Issuing organization can clearly define need(s) and identify detailed criteria for purchase
• Responses are formally evaluated on price and on qualitative factors
• The organization will award a contract at the conclusion of this process

Request for Proposal (RFP)

An RFP is a complex procurement request.  The issuing organization is seeking a partnership with a vendor/consortium of suppliers. Needs are set out in the request to reflect both the short and long-term goals of the organization. Some criteria and solution requirements may be known; but, the exact method for solving the defined issue(s) are not. The detailed solution is sought from the responses. RFP cycles are typically governed by procurement policies and/or legislation. This is to ensure the competition is fair and transparent. With the issuance of an RFP, there is a commitment of intent to purchase. The final contract will include information from the RFP document and the successful bidder’s response package.

• Issuing organization is able to clearly define need and some solution criteria. They are looking to the vendor community to provide more information on solution options.
• The opportunity may have had a prior stage. (I.e. RFI, RFEI, or RFSQ)
• Formal evaluation is completed on mandatory requirements, ranked components, and price.
• The organization will award a contract at the conclusion of this process.  

Negotiated Request for Proposal (NRFP)

One of the newer request types in the procurement process is the NRFP. The technology landscape is continually evolving. As a result, organizations may find themselves in situations where they may not be sure of exactly what their needs are ... or what they should purchase to address them. The basis of an NRFP is a multi-stage ‘dialogue’ between the issuing organization and the vendor community. The intent is to have both sides negotiate on the criteria details for the product/service acquisition. Several rounds of dialogue may be undertaken. The participants will incorporate information throughout. The process is transparent with each responding vendor involved - leading up to a final round. A best-and-final-offer (BAFO) by responding proponents is usually the final stage.

• Issuing organization is able to define some needs but is open to having more identified. They seek more information on capabilities and solution options from the vendors.
• NRFP involves a multi-stage cycle.
• The final round is formally evaluated. (A detailed review is done for earlier rounds. Information from these rounds is incorporated/expanded upon in subsequent rounds.)
• The organization will award a contract at the conclusion of the NRFP process.

So …… clear as mud, right?

The procurement process is complex. There are entire careers paths dedicated to mastering the field. And several job roles may make sure the processes are correctly followed. If you are participating in an procurement cycle, whether it’s on the requesting side or on the responding side, know there is help available. Procurement activities are some of the most collaborative things I have participated in.  I have learned more than I ever imagined, and continue to learn more about procurement and contract management every day :)

“Decision making, like coffee, needs a cooling process.” - George Washington.