The Request for Proposal/Request for Quotation

The individual responsible for initiating an RFP/RFQ should consider the following "philosophy" questions before moving forward:

• What is the end result? Lower costs, better service, specific functional requirement, or perhaps (legitimately) to demonstrate that the current provider is the best and no others can compete.
• Is it worth it? RFPs/RFQs are time-consuming for all parties. Sometimes it is better just to buy a hammer at the nearest store, regardless of its price. What economic or "political" conditions would make an RFP/RFQ mandatory?
• Is the document to be highly detailed? Is there enough information to write a worthwhile RFP, or will vendors be spending fruitless hours guessing what is required? For example, when bidding on a large PBX installation, the vendor needs to understand the number of digital and analog lines required because these drive the quantity of line cards, shelves, etc. If the RFP is too high level, one of two outcomes will result: (1) some potentially strong vendors will not participate or (2) bidding vendors will increase their prices to cover unforeseen costs. A third, less-savory practice is the deliberate underbidding on a vague RFP with the expectation that profits will accrue from the many change orders that the vendor knows will be required.
• How can a good list of suppliers be obtained? Should a two-step process be followed, with a first wave of perhaps ten respondents and a second tier of three for the most thorough review?
• How is the evaluation to be done? Who has the time, qualifications, and objectivity to do it?
• How much education is required from the respondents? Does the organization need key evaluators to attend demos, talk to references, etc.?
• What can be done to make an admittedly "fuzzy" evaluation process more fair? Will the "non-winners" be provided with a full explanation of the final decision?
• Will proposal content from the winning bidder go directly into the contract? This is an important requirement for the buyer because it ensures that the features and benefits presented in the proposal become contractual requirements.
• Will price increases be allowed? If the bidding and evaluation process takes several months, it is possible that the respondents' costs have increased in the meantime.

The request for proposal process

What is a request for proposal?
A request for proposal (RFP) is a document sent to telecom carriers from businesses seeking proposals from those carriers. Each RFP is unique, because each customer’s telecom environment is unique. The RFP document spells out specific details about the information the business wants the carrier to provide, especially the technical data. Sending out an RFP is usually the first step in procuring high-level telecom services, such as datanetwork installations. The RFP is sent out to multiple carriers and is essentially an invitation to a bidding war.

What is the purpose of an RFP?
The main purpose of an RFP is to solicit proposals from phone companies. The average business signs 2-year telecom contracts, and at the end of that time, the business may have lost touch with telecom market trends, products, services, and, most importantly, pricing. It has no idea what a good deal in today’s market is until it reads carriers’ responses to the RFP.

After evaluating two or three RFP responses, the business will have a clear understanding of the carrier service offerings and what pricing is available. Gathering market data is, therefore, one of the key advantages of using an RFP.

Some customers require the telecom supplier to include the RFP as part of the final agreement. Without the RFP, the carrier’s contract is the agreement. Carrier contracts are written by telephone company attorneys; they protect the interests of the carrier, not the customer. A well-written RFP, however, protects the interests of the customer, and, at the same time, sends strong signals to the carrier that the customer is in control of the relationship.

The main disadvantage of using an RFP is that the customer invests considerable time writing the RFP, evaluating RFP responses, and meeting with prospective carriers. This can be a time-consuming process. On the other hand, businesses can avoid the RFP process altogether if they are satisfied with their current carrier and are willing to allow the current carrier to provide the needed services.

What is the RFP process?
The RFP process consists of five phases:

The RFP is released to phone companies.

Phone companies question and clarify the RFP.

Phone companies submit proposals.

Customer evaluates proposals.

Customer selects the winning proposal.

What is specified in the RFP?
The core data in an RFP are descriptions of telecom services that the business has up for bid. These may be current services or future services that the business plans to add. RFPs can be used to procure local, long-distance, data and wireless services, network design, network installation, or any other imaginable telecom project.

An RFP explains the customer’s expectations for customer service, service ordering, trouble reporting, billing, resolution of service outages, and SLAs. Numerous other issues can be included in the RFP. The whole idea behind an RFP is that the customer manages the procurement process, not the carrier.

A key feature of the RFP is its scalability. The scope of services covered by the RFP can be increased or decreased. A business may use an RFP to procure 25 cell phones, while another business may use an RFP to procure all of its telecom services, including local, long distance, data, and wireless.

For high-tech services, such as frame relay and ATM, the RFP should give the customer’s specific technical requirements for these services. The RFP can be customized to include a large or small amount of technical data.

Who should use an RFP?
RFPs are normally only used by very large companies with complex, expensive telecom services. Smaller companies tend to solicit proposals informally, and they often do not have the time or manpower to devote to the RFP process. Larger companies have telecom departments, so they have the manpower to facilitate the RFP process. Bigger companies have more internal accountability and organizational layers, so the RFP also tends to appease these people inside the company. Many government agencies, for example, are required to secure multiple bids before entering into a new contract for services. Organizations that use RFPs tend to protect their interests more than businesses that shop informally for telecom services.

How does a phone company respond to an RFP?
After a phone company receives an RFP, a team of salespeople begins writing the response. The sales team consists of pricing experts, technology experts and possibly, on large accounts, regulatory experts. Their written response will follow the general outline of the RFP.

Carriers may try to gain a competitive edge by asking the customer questions to clarify vague parts of the RFP. Customers usually level the playing field by requiring that all questions be put in writing. Then, the customer sends each carrier a copy of the question and the customer’s answer.

The RFP process is designed to be an objective avenue for buying telecom services. None of the carriers should gain an advantage over another bidder. No carrier knows which way the customer is leaning. The objectivity of the RFP process should keep carriers honest. Because carriers know they only have one chance to win the business, they will be more likely to give their best and final offer in the very beginning.