Originally posted on on the e-Sourcing Forum [WayBackMachine] circa March, 2008.

A generally accepted (and obvious) “best practice” is to procure services via a robust competitive methodology. In general, this is achieved by issuing a comprehensive request for proposal (RFP) to each of the potential vendors for that service. The practice has now become so common that many organizations have developed a standardized template (or templates) and are able to rapidly churn out RFPs to meet the demands of its business unit customers. This semi-automated approach accelerates the overall procurement timeframe and enables the organization to rapidly achieve superior results for the procurement of commodity products and services. Unfortunately, as with any automated process, this approach has also led to a reduction in critical thinking that is applied to each RFP.

Hear, Hear! This is precisely the point I was trying to make in the doctor on Technology RFPs: Don’t Put The Cart Before The Horse!, although I was restricting my attention to technology RFPs at the time. “Filling in the blanks” on a template isn’t sufficient for large and/or complex projects. The RFP needs to be carefully composed if you are to achieve maximum value from it. That’s why it was nice to see the article “Beyond the Template” over on SourcingMag.com which outlined some best practices for:

• effectively creating a competitive environment
• clearly defining the services being procured
• enabling the objective evaluation of vendor responses
• achieving optimal terms, conditions, and pricing in the competitive environment

The article may be services centric, but it still has great advice.

Creating a Competitive Environment

• Accentuate the positive
  Why should the supplier want to engage in a relationship with you?
• Clearly specify what you hope to achieve
  What are your goals? What do you require from the supplier?
• Enable the vendors to differentiate themselves
  Be sure to allow some open-ended responses. Check-the-box, multiple-choice radio-buttons, and fill-in-the-blank does not leave much room for vendor differentiation.
• Ensure the vendors understand your environment
  How do you work? How will the relationship be managed? What do you expect from a supplier?
• Emphasize the importance of the transition period
  If you are transitioning away from a current supplier or a current process, be sure to explain how the transition process is going to work and what you expect from the supplier.

Defining the Services

• Know what you want
  An RFP should not be used to gather information to help the enterprise decide what it would like to procure — it should be used to gather information about what the organization is going to procure and how it is going to go about the process.
• Define the boundaries
  If you are procuring a product, who is managing the transportation? If you are procuring a service, what capabilities will the supplier be providing, what capabilities will you be retaining, and how do you define the break-points?
• Define the measurement criteria
  How will the supplier’s performance be measured?
• Put yourself in the vendor’s shoes
  Read the RFP from the viewpoint of a supplier. If there is anything that requires clarification, then clarify it. If you’re unsure if it is clear or complete enough, have an uninvolved third party (such as a colleague in another department) review it.

Objectively Evaluating Vendor Responses

• Establish discrete requirements
  What do you need at a minimum to consider a supplier? If you are unsure, do a multi-round process where you ask for general proposals on how a supplier will solve a problem, followed by a request for specific proposals once you have selected an approach.
• Weight the requirements according to their relative importance
  In order to score the proposals to select a winner, it is important to give more weighting to key factors.
• Define the proposal pricing format
  This will allow you to compare proposals apples-to-apples.

Achieving the Best Buy

• Make it clear that RFP responses are contractually binding
  Of course, this only applies to the final RFP/RFQ in a multi-round process.
• Use contract-ready requirements in the RFP
  This will prevent snags in the negotiation.
• Don’t put off until later what you can do now
  Do your best to make sure that the requirements in the RFP address all key considerations. After all, how likely are you to receive favorable terms regarding any items you forgot to address once you enter into a deal and lose the competitive environment?

This is great advice and, if you have the time, the full article is worth the read.