When a business determines a need to purchase a product or service, decisions about what service provider or vendor to use are based on proposals, written summaries of how the provider or vendor intends to meet the business's need. Businesses solicit proposals from other companies through the use of RFPs.
An RFP is a Request for Proposal, a formal document that outlines the company's need for a product or service and provides an outline for prospective vendors or service providers to follow in the development of a proposal.
RFPs contain details about the project, budget information, deadlines and the criteria that will be used to select the vendor or service provider.
In some cases, businesses submit RFPs to a specific list of companies that the business has already screened. Other times, businesses advertise RFPs in professional journals and newspapers.
RFPs provide a deadline for proposals to be submitted, usually several weeks or months from the date the RFP is issued. How long the business allows for proposals depends on the urgency of the company's need.
RFPs help ensure that every proposal received for a project contains the information the originating company needs to make its decision. It also makes the process more objective as it requires the company to establish criteria for selecting who will win a project.