It appears that there isn’t too much of a difference between a quote and a proposal aside from the length of the negotiations, but bids are quite a bit different from either a proposal or quote.
Invitation for Bids — aka Request for Bids
Sealed bids are generally used to procure high-cost items with easily definable characteristics. In these cases, agencies are looking for the lowest price. Generally, the typical process is as follows:
1. An Invitation for Bids is advertised.
2. Companies prepare and submit their bids.
3. A contracting official opens all sealed bids at an appointed time, reads them aloud and records them. Interested parties can view all the bids at this time, although they don’t have access to the bidders’ financial data and other proprietary information. The contract is awarded to the company with the lowest bid.
4. Contracting officials then make sure the lowest bidder is both responsive and responsible. Officials assess responsiveness based on whether companies submit their bids on time and in accordance with the instructions and requirements of the IFB. They gauge a bidder’s level of responsibility based on the company’s means to fulfill all the contract requirements.
Request for Proposals
Agencies typically issue a RFP when the award will be based on more than price. Like sealed bids, proposals are typically used for larger purchases, but they’re much more detailed than bids. The RFP process allows businesses and contracting officials to bargain over details before a contract is awarded. Depending on the size and complexity of the purchase, negotiations may include discussion of price, schedule, technical requirements, and the type of contract to be used.
Here’s an overview of the proposal process:
1. Officials issue an RFP containing all the information and instructions necessary for companies to prepare their proposals.
2. Companies write and submit their proposals, paying close attention to specifications in the RFP, such as required work plan, staffing and forms to be completed.
3. Officials review the proposals and select those deemed competitive enough to continue in the negotiation process (i.e., the ones that are shortlisted).
4. Negotiations begin between agency officials and the shortlisted companies.
5. Companies may be invited to submit revised offers, taking into account the concerns raised during negotiations.
6. The proposals are reviewed again. The contracting officials look for the proposal that provides the best value.
7. Before the contract is awarded, the agency determines whether the would-be contractor is responsible and has the facilities, quality-assurance processes, financial backing, etc., to complete the contract.
Request for Quotations
An RFQ is used for commodities, simple services or straightforward/uncomplicated parts with little or no room for product or service differentiation between responding vendors. Negotiation points could include delivery schedules, packaging options, etc.
Typically quotes are used for specific projects, so they are customized for each customer and detailed for each project. They are basically the same thing as a proposal, but they come off differently to the client.
A quote usually has less detail, and is designed to get the ball rolling — if the agency likes a vendor’s quote, a Statement Of Work would be provided to back it up, and ensure that everyone is talking about the same thing for the money.
Jeff Moore is a data reporter at The Daily Reporter. He stated full knowledge of the bidding process on his resume.