All RFQs cover key information about the product or service you want to buy. While RFQs may vary a bit by industry, they all feature the following sections:
INTRODUCTION AND EXECUTIVE SUMMARY
Give vendors an overview of your company and the requirements for the product. Since this is also a summary of the project, you’ll probably write this section after completing the rest of the RFQ.
BUSINESS OVERVIEW AND BACKGROUND
Describe your business and how the product in this RFQ will help you meet your goals. Consider including a brief summary of the market and anything else the vendor needs to know to bid on the project.
A pricing template lets you compare bids easily. Specific categories in your template can be cost elements and cost drivers. While templates will vary from product to product and RFQ to RFQ, the goal is to have all the information for a specific product in the same format so you can compare the bids quickly, easily, and accurately.
Vendors often are vetted during the RFI process. If you waited until the RFQ to make sure you are working with qualified vendors, include a questionnaire in the RFQ documents.
This section is the meat of the RFQ. Be specific about the product you want so you can get accurate and fair price quotes. You can include the following details:
- Product schematics or hardware requirements
- Part descriptions or item number
- Technical requirements
- Quality requirements
In public sector RFQs, an official fee (or tender fee) typically is required to ensure that the process is open and transparent. You may also want to require an earnest money deposit (EMD) as a way for vendors to demonstrate good faith in the bid. The money typically is held in escrow during the RFQ process. If the vendor earns the contract, the fee is included in the payment schedule. The remaining money in escrow is returned to the other bidders.
ASSUMPTIONS AND CONSTRAINTS
There may be other parts of this project that are not specifically included in the pricing for the product featured in your RFQ. In this section, list any other factors, such as licenses that need to be earned or awarded, travel expenses for the vendor, or other anticipated costs that the vendor might have to assume.
DIFFERENCE BETWEEN RFQ AND RFP
List the general terms and conditions (GTC) for the contract, and explain which terms are negotiable. The GTC typically includes payment terms, contract length, warranties, performance penalties or incentives, and renewal options. This gives vendors additional information to weigh when considering whether to respond to your RFQ. It also saves time during contract negotiations, since you’ve already explained what is open for discussion and what is not negotiable.
As part of the RFQ process, you have established the criteria for awarding a contract. The decision to include this information in the RFQ is strategic. Some companies include this information in the RFQ, as they believe it will help vendors understand the business culture and structure; others keep this confidential.
Be sure to include the contact person for questions, the deadline for submitting a bid, the format for the bid, and any other relevant details. You may also choose to have vendors submit their entire RFQ response in a form to expedite the bid-reviewing process. These standardized templates create apples-to-apples comparisons for you and the selection team.
Since the parts of an RFQ are similar from project to project, you can use a simple template or form for each new request and simply complete the sections needed. Here is a template with the essential components of any RFQ that you can use for a variety of industries, including the private sector or a small business.
BEST PRACTICES FOR WRITING AN RFQ
Don’t assume that sharing an RFQ with pre-selected and pre-qualified vendors will yield high-quality responses and the best prices. You will receive better bids if you have a clearly written, well-organized RFQ. Here are some best practices for writing an RFQ:
USE A TEMPLATE
An RFQ is packed with information. Use a template to ensure consistent formatting that potential bidders can read and respond to easily.
BE SPECIFIC ABOUT YOUR PRODUCT
Tell vendors your exact requirements and ask them to be precise in their response.
DEFINE YOUR EXPECTATIONS
Describe what you want in the RFQ response (this is where templates come in handy). Even more, your business hinges on whether the vendor can deliver. Describe what you want, when you want it, and what happens if the vendor exceeds your expectations about deliverables — or fails to deliver.
ASK RELEVANT QUESTIONS
Time is a precious resource for companies. Don’t waste vendors’ time by asking questions in the RFQ that don’t specifically relate to your product.
SET APPROPRIATE DEADLINES
Give vendors the an adequate timeframe to prepare a thoughtful response. For smaller RFQs, two weeks is a good start. Add more time depending on the size of the project and the amount of information in the RFQ.
REVEIW AND REVISE THE RFQ
Writing is really rewriting. Once you draft the RFQ, ask key stakeholders and trusted partners to review it and answer these two questions: Have you correctly identified your needs, and have you left out any critical details?