RFP Red Flags and Opportunities

During class the other night I discussed the process for preparing and evaluating requests for proposals (RFP).  These RFPs are sent to potential vendor partners asking them to respond to a business need by proposing a solution they can provide to the firm.  During our class we also discussed a formal and semi-quantitative method we can use to evaluate these proposals.

In preparing for this lecture I came across an article describing several red flags when reviewing and evaluating the vendor proposals.  These red flags highlighted some important considerations for evaluating vendors and their proposals and most of them signal issues that must be addressed before accepting a proposal.  However, not all of these red flags indicate a proposal that should be rejected.

One of the red flags mentioned in the article cautioned against proposals where the vendor seeks to create a partnership with the organization to share in the profits or revenue resulting from the service provided.  While this proposal should raise awareness that more thought and planning is required if this proposal is accepted, we should not disregard these types of vendor proposals.

There is benefit to these partnership proposals.  When dealing with vendors I prefer to use the term vendor partner and this term needs to be applied as we evaluate the proposals.  We need to look at these proposals through the lens of potential partners for the firm and evaluate our perception of the vendor's ability to add value to the relationship and satisfy the scope of the proposal.  In this RFP we are not looking to simply purchase something but rather looking to establish a productive partnership.

Although partnership gainsharing models are more complex, these forms of partnerships may provide the incentive for both the vendor and the firm to take advantage of and build on each other's expertise.  The resulting outcome may produce a new innovative product, process, or service difficult replicate by other competitors and will result in a competitive advantage for the firm and increased profit margin for the vendor partner.