Why RFPs are a bad idea and what to do instead

Is your non-profit or union advocating for social justice? Considering building a new website? You may be tempted to issue an RFP. Here’s why that is a bad idea and what to do instead.

What are RFPs?

A Request for Proposals (RFP) is a document created by an organization when it seeks proposals from vendors for doing a piece of work. It consists of a statement of the scope of work, the desired timeline, and the criteria for which the vendor will be selected. RFPs can also include the project budget.

RFPs became popular in business and government because they help organizations avoid nepotism and overselling. In the past, it was not uncommon for boards to hire unqualified family members and friends for jobs again and again. Organizations would often get bilked as contractors would inflate the cost of a project by charging for unnecessary frills and whistles. The RFP makes the needs of the organization clear and provides a transparent process for making a vendor selection.

RFPs have major downsides. To understand these, let’s look at the RFP process from the vendor’s perspective.

RFPs from the Vendor Perspective

Vendors either proactively seek RFPs or they are sent them from clients. To answer an RFP, the vendor does a fair amount of work. Vendors will study the RFP document, research the client, and get up-to-date with new technologies and best practices.

Then comes writing the proposal, which takes anywhere from a few hours to several days. Multiplied over the many vendors who will be submitting proposals, a ton of hours goes into answering any given RFP. Of course, many of these hours will end up being unpaid, since most vendors are turned down.

Since most non-profit web projects are fairly small (less than $20k) they are typically served by small web agencies or lone freelancers. The margins for web development are very slim for small companies. Competition is fierce. As a result, many in the industry are working for very low wages.

What’s more, vendors will often underbid each other to be more competitive, suggesting a price that does not reflect the true cost of the work. This bad for the organization, as this can result in cost overruns on the project or unfinished work. Vendors may run themselves out of business through underbidding, leaving the organization with a half-finished project and no support.

As organizations and vendors working within the field of social justice, we should lead the way in fair work practices. RFPs clearly present some social justice conundrums. Namely, RFPs, by their structure, require many low-wage workers to provide many hours of unpaid work. Conversely, the benefits from the organization’s perspective are undeniable. Is there a way to do better for vendors, while still maintaining an organization-centred proposal process?

RFPs, Social Justice and How to Do Better

A better way of doing RFPs is with a Request for Statement of Interests. This is a process wherein you put out a public call for vendors, stating that your organization is interested in working with vendors within a specific domain. You can state who you are, and the basic parameters of the work. You do not need to know the full scope of the work at this point, just your general goals and what sort of working relationship you are looking for. You can also ask for a portfolio of work, though not references.

Organizations will learn about the folks and skills available in their community, while vendors have not had to invest a ton of hours writing a fully-fleshed out proposal.

Once you have a list of interested vendors, you narrow the field by picking the vendors you’d like to have a call with. On this call, your goal is to learn more about the company and how they work. Do they understand your goals? Do they understand what you mean when you talk about your work?

After these calls have yielded a couple of vendors you feel comfortable working with, have a discovery meeting with them. During this meeting, vendors will be encouraged to ask all the questions they need in order to understand the goals you have and how they can help. Then, vendors will be asked to create a formal proposal explaining how they would work with your organization in order to meet its goals.

Functionally, this document will look very similar to a response to an RFP, with a few key differences. While allowing vendors to propose creative solutions, it’s important that you press vendors to be specific. They should provide clear deliverables and key milestones. Second, you are only asking this work to be done by vendors who have a realistic chance of winning the contract.

Since you’ve had these more in-depth meetings, you may be tempted to only solicit a bid from the one vendor who seems most likely to deliver an acceptable proposal. In some instances, that may be appropriate. Usually, in the interests of transparency and hiring the best vendor for the job, you are best off soliciting proposals from two vendors so you can compare the approaches and ensure the final scope covers everything you need.

In order to acknowledge the losing vendor’s unpaid labour, your project budget can include an honorarium. This should represent a standard hourly rate for at least a few hours (more if your project is particularly complex or if travel was required for meetings). Vendors put a lot of thought and effort into giving you their input for your project. This input is often valuable for the organization, and so the honorarium can also be seen as a way of compensating vendors for providing a service to the organization.

Using a Request for Statements of Interest you will not only result in a better working relationship with vendors going forward, they also contribute to a more just working environment for everyone involved. Consider experimenting with a Request for Statements of Interest for your next project.

Be the first to comment

Please check your e-mail for a link to activate your account.