Deciphering Government Procurement: RFQ vs. ITB vs. RFP

It’s easy to get confused when you start out in government procurement as agencies use different acronyms to describe different types of competitive procurement processes.  To make things harder, terms are sometimes used interchangeably but generally there are 3 types of solicitations that government agencies issue:

• RFQ – Request for Quotation – This is generally used for informal solicitations when the purchase value is below a certain threshold (the level of which varies from one agency to another). A purchasing officer will contact a vendor and ask them for a quote to buy a good or service.  The officer may be required to contact a minimum number of vendors but won’t have to publicly advertise the purchase.  From the vendor’s perspective, work to respond will be minimum, often not much more than a short written quote.  Sometimes the whole process can even be conducted verbally

• ITB – Invitation to Bid – Also sometimes known as an IFB – Invitation For Bid.  This is used for formal solicitations when the purchasing department is capable of specifically defining the scope of work of a service or the precise specifications defining the commodities required.  A formal advertisement of the ITB will be published and bidders will be asked to respond through sealed bids that must be returned by a specified time.  ITB’s are primarily based on price and are 9 times out of 10 awarded to the lowest bidder.  There are occasions when the lowest bidder will not win but there needs to be good reason and we will look into those circumstances in a later post

• RFP – Request for Proposal – This is a more complex version of the ITB used for formal solicitations.  An RFP is required when specification and price are not necessarily the predominant award criteria or when an ITB might not be in the best interests of the government agency.  This is the longest of all the procurement processes and often involves the establishment of an evaluation committee who will score the vendors in a number of different categories before reaching a decision who to award the contract to.  Vendors are usually invited to meet with the committee and present their company and the service they would provide.  As with any purchase, price is important but won’t be the only basis for a decision

I have seen numerous occasions where a bid is defined as an RFP but is really more like an ITB so you always have to read the bid documents carefully.  Understanding this is key to determining your strategy in responding.

Tagged as: ITB, RFP, RFQ