Forms used by Procurement

Typical Forms most used by Procurement Professionals

In order to manage the need to purchase supplies and services, purchasing professionals turn to certain forms or documents to obtain the internally requested products or services.

Some standard forms you might be familiar with would be: Request for Quotation; Request for Proposal; Invitation to Bid; and there are many others.

While most of these procurement forms are relatively straightforward, the Request for Proposal is a form that has continued to evolve since its first started to appear in the early ’80’s. Since then, RFP’s have become more prevalent, more refined and in some cases are all some companies issue (not what we recommend). Regardless, companies that purchase goods and services need procurement forms to help them manage their business. These forms are a necessary evil and will help you ultimately complete the task of getting to an award.

Role players in an RFP / RFQ

Before we can detail the forms most used by purchasing department today, we think some color on the process is needed. Typically there are 3 or 4 role players when it comes to the RFP or RFQ process. There is a Tenderer aka Bidder / Offeror / Vendor; then there is the Owner which is the parent company issuing the document — then the user or internal department making the request or the group needing the material or service — and last the procurement officer who is the person managing the RFP / RFQ. They often generate the documents, issue, analyze the offers, make a recommendation and manage the award. There are others like the accounting department which will pay the vendor and so on.

Supplier/Vendor: A seller of materials and/or supplies who submit a proposal or quotation against your requirements.

Now back to the most popular forms used today:

  1. RFP – (Request for Proposal). Without question, this form is considered the go to form for procurement professionals, on larger dollar spend and when your selection criteria might use additional factors other than price, like service capabilities or technical.
  2. RFQ – (Request for Quote). To some this is up for debate, but depending on the organization, sometimes the Buyer is simply looking for price and delivery on a simple material request.  We need 6 widgets and here is the part # so in this instance a RFP is way overkill and is not worth the cost or effort.
  3. EOI or RFI – (Expression of Interest) or (Request for Information).  An Expression of Interest (EOI) or (RFI) is used to gauge interest from potential suppliers for a potential upcoming project on the drawing board or hope to officially tender in the near future. An EOI, gives you the opportunity to pre-qualify vendors to ensure they are capable of completing the work under the restrictions or specifications outlined in your document.
  4. LOI or LOU – (Letter of Intent) or (Letter of Understanding). Often the next document to be used by the purchasing department if the spend warrants (vs going right to a PO).  It captures the summary terms negotiated by both parties during the award process and these details will eventually make their way into the formal contract. Simply, the Buyer is looking for a document they can use to bridge them over until a formal contract document can be executed.

There are many other documents a Buyer will use in today’s purchasing and if you, like many of us, find the RFP Process overwhelming or too time consuming hang tough as Our Step by Step RFP Guide will be released soon. It will simplify the RFP Process by providing a step by step guide c/w with sample forms typically used when issuing a RFP — from start to finish. All forms will be provided in edit friendly Microsoft Word format. This comprehensive guide and template pack will be provided at a discount to all our subscribers and with returning customers receiving additional discounts over and above discounts offered to our subscriber base.

Evolution of the RFQ

Evolution of the RFQ:

Acronyms are becoming a part of everyday purchasing lingo. Here are just a few we are becoming accustomed to: TCO, RFQ, RFI, RFP, LOU, LOI, ABC, SPC. It does seem like every year there is a new term being introduced into the purchasing arena. For the experienced purchasing agent, the most familiar of the above terms would be the RFQ and it is a document which has evolved and become more complex over the years.

Well TCO is Total Cost of Ownership, SPC is Statistical Process Control and it is used in manufacturing, ABC relates to classification of your inventory and RFQ is a Request for Quote.   The good old RFQ which all of us COP’s – Crusty Old Purchasers understand very well as it was the only document utilized in early purchasing. A request for quote has been around the longest and in the old days everything went out or was issued as a request for quotation or quote. It was sometimes called an invitation to quote or invitation to tender and these both are part of the RFQ family.

Then came the RFP which is a request for proposal. This is where the vendor

How To Succeed With Tenders

Nine (9) Simple Suggestions to Improve Your RFP Response(s)

Preparing outgoing tenders are skills which are a critical component of the professional buyer’s job description, however, responding to a tender or RFP is a critical component to the success of any business. If you fail to succeed at receiving the award as a result of your tender responses it is  likely you will not be in  business very long.

Nine (9) simple suggestions which will increase your chances at winning more tenders.

  1. Pre-Game Preparation: We love the sports or game analogy and preparing to respond to a RFP or a tender is no different. Prior to the game, athletes are practising and completing training to ensure they are successful on game day.  Responding to a tender request is no different. Preparation is key and there are many areas you can prepare ahead of time or prior to responding to a RFP or RFQ request.
  2. Training or investing in learning will always result in a great rate of return and improve chances! Keep all certifications and credentials current and readily available.
  3. Tender responses almost always require details or specific profiles on your team, approach and methodology, management, price and past experience.
  4. With the often restricted timelines to complete the tender response, it is crucial that time is allocated to ensuring the best possible solution to the project’s requirements is presented at the best possible price.  Most effort needs to be dedicated to providing a solution and not a re-hash of past experience.
  5. Obviously, a successful track record of implementing or past experience in similar activities will be evaluated and contribute to your success or failure for any tender.  But this doesn’t imply spending countless hours to locate and compile a summary of past experiences is time wisely spent – this can be done now and on an ongoing basis.
  6. All tender requests are likely to call for an array of details which exhibits your experience in past or similar activities.  Information required almost always consists of the activity name, location and duration, client, project value, key personnel by name and title, and a synopsis of the activity.
  7. Aggregating this activity is clearly destined to be a challenge if it requires searching for staff and past associates for details, relying on memory, etc.  The answer is to encourage the habit of compiling relevant information as soon as a project begins, and keeping the information current.
  8. This can be made even easier by capturing information from the start of a project consistent with how a future tender might require the information presented.
  9. Major organizations request a Project Data Sheet (PDS) for each project example that you are including with your tender response.  This is often a single page that captures all the information required in the evaluation of your response.

The Use of Quotations

Quotations are requested when the size of the requisition or proposed commitment exceeds a minimum dollar amount stipulated usually by policy in the organization of the bidder: for example, $500.00. This rule may not apply in Governmental purchases as they are required by law to perform and award a RFQ to the lowest responsible bidder. In some Industries, proposals may be requested with the intention of selecting a firm to negotiate or settle final prices with.

Depending on your organization, after a RFQ

RFP – What is it?

Request for Proposal – RFP:

What is a RFP and how and when should a procurement professional utilize it. A Request for Proposal (RFP) is an invitation to Vendors to submit a written offer to supply services or a solution to a requirement.

So, you have an internal need or requirement and there is nobody qualified in the organization to manage the requirement or possibly resolve it. You need to outsource the job and now might be when your employer requests you issue a RFP.

The RFP is then written to illicit positive feedback, therefore, needs to be designed professionally and must clearly identify the actual work you are hoping to farm out and the expectations.

More specifically, it is written to ensure suppliers don’t assume the entire risk. In manufacturing, this might mean the buffering of raw materials and finished goods to meet the final demand for goods. In a services type RFP, it should ensure the consultant has a clear indication of the amount of time and or resources he or she is expected to put into the project.

A RFP is different than a Request for Quote (RFQ). With a RFQ the Vendor can be certain as to the supply risk. For example, like having enough capacity to ensure supplies and goods at the right quantity, quality, time, and cost. We need 12 pairs of leather gloves and here is the part number. This RFQ is straight forward and comparing costs are for the most part simple. A RFP is not necessarily so cut and dry and quite often asks the Vendor to propose a solution.

Okay let us get back to writing the RFP. The Buyer will need the Vendor to define the specific monetary and/or service obligations which make up the offer. It is the Purchasing departments job to make the RFP available to several suppliers to respond with a competitive proposal or a solution to your request.

What to include – the Request for Proposal should include a short but detailed description or specification of the products or services which are required. This can also be identified as scope. As with many business writing efforts, an effective request for proposal will begin by declaring the purpose for the document. Even the most casual of formats for a RFP will incorporate details of this nature. In comparison, a highly structured format informs the applicant precisely how to arrange data in a manner that is certain to have significance to the issuing business. So, it is vital to be clear on the scope of work and try not to cloud the document with legal terminology. In other words, leave all the legal terms to the end of the document as this might deter recipients or quality vendors from offering. The higher the risk the more terms and conditions might be required but again not all RFP’s warrant forty pages of legal requirements.

Purchasing Glossary or Buzzwords

RFQ – RFP Glossary Buzzwords

Ever wonder what some of the terms used by Materials Managers and Purchasing Agents mean? Terms like RFQ, FOB, DNR , or a RFP, Vendor, Standing Order Agreement.  Although, these acronyms / terms are used frequently and recognized in the field, it is always a good idea to add them in their full context at least once or define the term on your definitions page to ensure there is no misunderstandings.  Here are a few terms commonly used in the Materials Management or procurement field:

RFQ – Request for Quote or Quotation
RFP – Request for Proposal
ITQ – Invitation to Quote
RFI – Request for Information
EOI – Expression of Interest
IFB – Invitation for Bids
ITT – Invitation to Tender
RFB – Request for Bid
LOI – Letter of Intent
LOU – Letter of Understanding
FOB – Free on Board

UTQ – Unable to Quote
DNR – Do not reorder
UTS – Unable to Supply

Standing Order – A standing order is an open ended purchase order or in essence open ended contract which grants authorization to make regular periodic shipments of a specified product. Usually an annual agreement.

Supplier – A provider of goods and services that typically bills on an invoice and has regular transactions with the Owner or Buyer.

Vendor – Another Name for a Supplier.

Compliance

  • Ensuring suppliers perform their obligations and supply goods in accordance with contracts or that services are performed as prescribed by site safety rules and regulation and certain federal, state or provincial laws.

Sample of a compliance clause in a supply agreement:

  • The goods called for in this agreement shall comply with all applicable codes, standards and/or both regulations of the governing inspection authorities at the place of use.  The Vendor shall acquire and keep in force all required permits and certificates of approval.   The Vendor shall comply with all provisions of law governing its performance under this agreement including, without limitation, Safety and Reclamation Codes,  all dangerous goods legislation and all workplace hazardous materials legislation and regulations governing the design, safety, handling, packaging, labeling, transport and the use of goods.

Due Diligence

  • Due diligence in a broad sense refers to the level of judgement, care, prudence, determination, and activity that a person would reasonably be expected to do under particular circumstances.

Force Majeure (sample clause)

  • No party hereto shall be liable for any delays in the performance of their obligation hereunder (excluding financial obligations) if any such delay or failure is due to acts of God, war, riot, sabotage, strikes, lockouts, or differences with workers, accidents, lack of water, power, gas, materials, any and all government laws or regulations, or any disabling cause beyond the reasonable control, and without the negligence of, the party invoking this clause.

Notice to the other party of any event of force majeure stating the date of the commencement thereof shall be promptly given and shall immediately be followed by a notice setting for the particulars of the event of force majeure and the expected delay.  The party so affected shall take all reasonable steps to remove the force majeure conditions and to resume, with the least possible delay, compliance with its obligations under this agreement, and shall promptly advise the other party of the date when the force majeure is ended.

Assignment (sample clause)

  • The Vendor may not assign or sublet any of its rights or obligations under the Agreement without the prior written consent of the Owner,  which consent may be arbitrarily withheld.

Interested in learning more or in acquiring an array of templates which cover the above terms? If you are planning to issue a RFP or RFQ, please visit our Special Offers page – RFQPro.com can help.

When to use a RFP versus a RFQ

Using an RFP versus a RFQ:

This is a good question and one we hear often. We will try our best to provide a simple answer to help you make an informed  decision when performing your purchasing duties. This scenario surfaces when you are faced with generating a purchasing document to send to your suppliers.

Documents issued by the Purchasing group can be an RFQ (request for quote), RFI (request for information), RFP (request for proposal), or ITQ (invitation to quote), IFB (invitation for bid) or others.

A RFQ is usually used when the Owner knows exactly the type and quantity of goods it wants to buy while RFP’s ask bidders to provide a solution to a problem that could be solved in different ways.

An example of when to use a Request for Quote (RFQ) would be if you are buying 100 each Toshiba Laptop Computers c/w 2 GB ram, 100 GB HD, DVD Burner, Windows 7. You know your exact requirement and have a specification to include or issue with the request.

An RFP might be used if you were unsure as to whether you want to purchase, lease, rent  those same 100 computers with varying specifications for software and hardware requirements that may differ from PC to PC. This gives the bidders an opportunity to offer a solution to your requirement.

With the above in mind, it should be noted that evaluating a RFQ is usually easier than trying to determine an award from the results of an RFP.

Sample of Basic RFQ Template

Basic RFQ Template:

The expenditure or value of the acquisition item and the risk usually determines the amount of work and effort you put into your RFQ | RFP proposals and for that matter the whole quotation process. Sometimes, you just need a simple or basic RFQ, a one pager with some basic terms and conditions which will allow you to go out for quotes. A basic RFQ Template like RFQ19 may do the trick.

If you are looking for a simple or basic RFQ | RFP template you can use to solicit quotations, proposals this template should suffice. Keep in mind you can change the automobile specification section of the template and customize it by adding your own scope or specification for any purchase requirement.

Download free vehicle RFQ sample template >>> RFQ19 – Basic RFQ Template for Vehicle

More edit friendly RFQ Templates

Sample Letter of Intent (LOI) or Letter of Understanding (LOU)

Letter of Intent-LOI or Letter of Understanding-LOU:

For larger contracts or big dollar supply agreements, some corporations prefer to start a relationship by issuing a letter of intent (LOI) to the successful bidder of a tender. In essence, it is an acknowledgement by both parties of their intent to carry out the offer at hand. As a buyer, you are informing the Vendor or Supplier of your intention to proceed with the commercial arrangement proposed in the bid and this is the start of the formal documentation process.

This following sample LOI can be used to get the ball rolling until formal contract documents are drawn up and executed by the involved parties.

This particular sample letter of intent or letter of understanding covers a technical supply agreement used to purchase bulk commodities with prices that might be tied to a published index or indice.

Feel free to download and use this free sample letter of intent or letter of understanding when awarding your RFP or RFQ.

Download PDF file here >>> RFQ6 – Letter of Intent

It is a little cramped as we wanted it to fit onto a single page…Note: all RFQPro.com purchased downloads include edit friendly Microsoft word templates.  If you are looking for a specific sample Letter of Intent (LOI), or LOU template we have included them in our Premium Pack and it is available for purchase by selecting the download button in the margin.

award letter

Award Letter for RFQ | RFP

Award Letter for RFQ or RFP:

award letterOut of all the letters a Buyer will pen during a work day, the Award Letter for an issued RFQ | RFP is the most enjoyable. Advising a successful bidder they are about to receive the contract for your business is always a pleasant task. Unfortunately, the rejection letters for the remaining bidders should also be issued around the same time. If you are looking for an example of an Award Letter you can use to notify the successful bidder they have been selected or awarded the work please see below.

You can download this free sample award letter here>>> RFQ14 – Award Letter

Visit our special offers page to purchase this template as well as a rejection letter and other everyday  documents in an edit friendly version of Microsoft Word.