What is a Request
for a Quotation (RFQ) and how do you define it?
A request for quotation
(RFQ) also known as an invitation to bid (IFB), allows companies to solicit
bids and price quotes from contractors and suppliers in order to be eligible to
complete certain tasks or projects. Businesses that require consistent supplies
of a certain number of standard products will find the RFQ process very
important. Companies can send RFQs before or after a request to proposal (RFP).
Request for a quotation, is a
business process that allows a company to request quotes from contractors and
suppliers for a particular task or project. A request for quotation can be sent
in its entirety or as a tandem with an RFP.
A business will generally send an RFQ if the quantity of a standard product is
known, and ongoing needs are met. Businesses target specific vendors or contractors
so RFQs don't generate unbidden bids and
quotations.
How do Requests for a Quotation Work?
The first step to submitting a Request for quotation is the
RFQ. Both documents provide information about the project and services, but
RFQs usually request a more detailed price quote. Businesses often design RFQs
to request generic products. RFPs are designed for niche, unique projects that
have specific specifications and quantities.
Not only do they need to include pricing information, but also details like payment terms and factors that could affect a company's bid selection process, deadlines, etc. An example of a government agency looking to purchase 500 computers with a specified hard drive size and processing speed would send an RFP to multiple vendors to solicit their bids.
The RFQ format is standard within a company so when RFQs are returned with
price quotes, the soliciting firm can easily compare them. RFQ processes
typically consist of four phases: the preparation, processing, awarding, and
closing phases. The vendor who meets the minimum qualification criteria and
offers the lowest bid will generally be awarded the contract.
RFQs do not constitute public announcements. The soliciting
company does not have to prepare long procurement documents because it only
sends RFQs to businesses it trusts.
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