Module 5

Deciding When to Respond to a Request for Proposal

• Do You Have Enough Time to Respond?
• Are You Prepared?
• Can You Afford it?
• Is the Opportunity in Your Area of Core Strength?
• Other Factors to Consider
• Consider a Strategic Alliance
• Risk Management
• Deciding Not to Respond

DECIDING WHEN TO RESPOND TO A REQUEST FOR PROPOSAL

This module outlines how to assess which opportunities to bid on.

Submitting a bid is a big commitment of time and resources.You can’t bid on everything — you need to be selective. The questions and considerations in this section should help you with your decision.

Do You Have Enough Time to Respond?

It’s going to take a considerable amount of time to read, interpret and then effectively respond to an RFP. You need to make absolutely sure that you have adequate time to do a good job. It takes more than a day or two to assemble a strong response to an RFP, and often the process can last a few weeks or more, depending on the complexity of the project, the requirements of the project, and the overall dollar value. Typically, the higher the value, the more time and effort it will take to assemble your bid.

Before you start spending time and resources on the bid, make sure that you know when the bid is due and confirm that you have enough time to prepare your response. If you’re just starting to review the RFP a day or two before the closing date, you probably don’t have enough time to prepare a winning bid.

You need to give yourself adequate time to review the RFP, assign tasks if necessary, develop your approach, engage with strategic partners, consider pricing strategies, and assemble the bid document into an attractive package that is delivered on time to the designated location. Late bids are usually rejected and returned unopened!

If the deadline is looming and you don’t have time to put together a “wow” bid, then you should seriously consider whether you want to submit at all. Submitting a poor proposal may be worse than not submitting: it can create a negative impression about your company and its capabilities.

Are You Prepared?

One of the secrets of putting together a successful bid is being prepared for opportunities as early as possible — ideally before they even become publicized. Don’t wait until the last minute to prepare marketing materials for your business and CVs for your staff and team members. These are common elements of a bid and should be “canned” materials that are up to date and ready to insert into your proposal at a moment’s notice. In some instances, you’ll only have a week or two to prepare your response, so you’ll want to make the best use of your time. Your bid must reflect the very best that you can offer.

Can You Afford it?

It costs time, resources and money to assemble a strong proposal. As a business, you need to be aware of these costs and make an assessment of whether the cost is worth it. Some of the hard and soft costs you can expect include:

• a considerable amount of time for at least one person to assemble the bid
• the opportunity cost of not having that person working on other projects or bids
• the actual costs of producing the proposal, having it printed and bound, and shipping it to the buyer

Estimates range considerably in terms of the total cost of assembling a proposal for a governmental or other large organization like VANOC. Assembling the bid can range from several hundred dollars to thousands of dollars. The value of the contract will give you an indication of the effort required. The key point is to not underestimate the cost involved in assembling a high-quality proposal.

Is the Opportunity in Your Area of Core Strength?

Avoid the temptation to reinvent yourself to try to win an RFP. You should respond only when you feel certain that your company has the capability to deliver the requested products, services or solutions. Think about how this contract (especially if it is significant) will affect your growth plans. If devoting significant resources to fulfilling the contract means not moving forward in an already planned direction, then ask yourself if submitting a bid is the right thing to do.

Other Factors to Consider

To help decide whether you should submit a bid, you may need to gather more information. Usually the RFP package will include a receipt confirmation form. By filling in and returning this form, you will receive all subsequent information regarding the RFP, including any changes made by the purchaser. Many competitions include a bidders meeting. The bidders meeting provides detailed information about the project. If you cannot attend, you may request a copy of the minutes (which you may receive automatically if you have returned the receipt confirmation form).

Knowing who the competition is may also help in your decision.You can get some insight by attending the bidders meeting (although attendance is not a prerequisite for submitting a bid). Sometimes the buyer’s contact person may be able to tell you who has returned a copy of the receipt confirmation form.

Consider a Strategic Alliance

In today’s world of specialization and niche services, it’s more important than ever to consider the value of strategic alliances and business partnerships as a means to growing your business and responding effectively to opportunities.

You may decide that you want to pursue the opportunity but don’t have the time, internal capacity or range of products and services to completely fulfill the request. You may wish to consider forming a strategic alliance or even a formal partnership to submit a bid. This could increase your collective capacity to deliver products or services, or help meet complementary purchasing objectives such as sustainability.

There are many factors to consider when making this decision, and you may wish to seek some professional advice on the merits of this approach.

Some advantages to consider include:

• increasing your capacity to deliver a range of products or services
• strengthening your “sustainability advantage” (see Module 6)
• forming new partnerships that can take advantage of other opportunities in the future
• developing easier mechanisms for growth (less capital investment)

Some challenges to consider include:

• harmonizing business systems to work efficiently together and ensuring adequate time and money to do this well
• assigning someone to be the lead organization and provide a single window of communication and contracting accountability to the client
• providing accountability for delivery of services, such as who will take responsibility for problems or concerns that may be raised by the buyer

Risk Management

Module 8 outlines some of the risks you will need to manage if you are successful in winning the bid, such as financing and credit, supply chain stability, and service to existing customers. Now is the time — before you are locked into a legally binding obligation — to assess whether your company can deal with these risks.

Deciding Not to Respond

Only you can decide whether to submit a proposal. Should you choose not to, your eligibility to compete on future projects will normally be unaffected. Any exceptions to this will be explained in the RFP. For example, the RFP may be for the first stage of a project for which competitive offers on subsequent stages will be requested only from respondents to the first stage.

LET THE BUYER KNOW THAT YOU DON’T INTEND TO BID

It’s a good idea to let the buying agency know that you will “pass” on an opportunity to bid, especially if you were approached or invited to submit a proposal. This is just good business sense and demonstrates thoughtful communication on your part. If you haven’t been directly invited to bid but your company is known in the marketplace, it can be an especially good idea to reply with a letter or phone call. This strategy gives you an opportunity to have some contact with the buying organization and can help position you for future opportunities.

WATCH AND WAIT — A LEGITIMATE STRATEGY

You may decide not to bid for a whole host of valid reasons. You might decide to “watch and wait,” whereby you closely monitor the bidding opportunity in hopes of getting subcontracting opportunities with winning bidders. Keep close tabs on bids that are of interest to you. When winning bidders are announced, have your marketing materials ready to provide to them. In Module 8, companies that have been successful in the bidding process are advised to mitigate risks by having backup suppliers. Your company could be one of those backups. Think about how you can help the winning bidders.

For a quick reference to the key points raised in this module, see the “Bidding Checklist” at the end of this handbook.