People often ask what the difference is between the Expression of Interest, Request for Proposal, and Request for Proposal approaches to the procurement of goods or services. These methods are ways in which a company (very often a public/administrative or government body) solicits bids or proposals for the provision of services or products. The differences between these three approaches are described in this article.

Expression of Interest (EOI)

Expression of Interest (EOI) calls are mainly used when the requesting company does not have a strong idea about the type of product or service required. The company publishing the EOI may have a high level of understanding of your business problem or requirements, or the type of product you require, but are unsure of the market’s ability or desire to meet your need. The company publishing the EOI may need to collect additional information before some purchasing decisions can be made.

Examples of useful information obtained from an EOI include identification of:

1. technologies, products or services available on the market to meet your business needs
2. the willing and interested parties or suppliers offering the potential products or services
3. whether any of these potential companies will accept the terms and conditions imposed by a contract or delivery expectations
4. the maturity and experience of the companies offering those products or services, and their ability to offer similar products or services
5. the probable indication of the costs associated with the delivery of the product or service
6. a pre-selected number of vendors, which can be used to advance to an RFT or RFP

An organization is unlikely to buy directly by conducting an EOI. Given the cost and effort involved in preparing a response to an EOI, requesting companies often hire specialist consultants to conduct market research to learn about available products and services and their providers without conducting a formal EOI. This method ensures that potential providers do not incur costs. This also helps if the applicant company does not want to highlight to the market that it is about to make a purchase or that it has not obtained the financing for the project.

If an EOI is conducted, due to the costs involved, many potential respondents may be hesitant about submitting a response. However, the last point (6) mentioned above is the key issue that potential responders need to balance when determining when to respond. If a business does not respond, there is a potential risk that it will not be able to enter the RFP or RFT stage of the procurement process. This decision to respond can only be made by that company by weighing the benefits and disadvantages.

Request for Proposal (RFP)

Requests for Proposals (RFPs) are used to directly purchase goods or services. The requesting company clearly understands your problem or business need and is aware that there are potential options available in the market, but is open to suggestions to solve your problem. This is quite often requested for consulting services, where the exact physical deliverables cannot be defined, or in information and communication technology (ICT) projects where there are multiple solutions to a business problem.

The RFP gives the purchasing company the greatest flexibility in purchasing, since although the requirements may be defined, the solution is not. The requirements stipulated by the RFP can be very specific or broad, high-level business requirements. However, by nature, an RFP will allow an offer to suggest the best way to solve the problem. RFPs give responding companies the best opportunity to demonstrate how they would solve a company’s business problems or needs.

Once an RFP has been evaluated, the requesting company may end up in a number of situations, such as:

1. decide on a preferred solution or service provider, and negotiate a contract with them
2. shortlist a few preferred candidates and enter into negotiations with all of them, as a tactic to find the best match
3. decide to accept part of a solution from one or more vendors, if they are not convinced that any solution is acceptable
4. decide that there is no acceptable solution and change their requirements, and request further submissions from companies that have responded to the RFP, or close this particular RFP and start over

Request for Tender (RFT)

RFPs are often used in the building and construction industry, where solutions to a problem are very specific and have been designed and specified. An example is a tender for the construction of a house or a bridge, where the designers have drawn up the plans with the measurements and all the materials have been clearly specified. I can’t imagine many people putting out a bid on a “four bedroom house” and not telling the prospective builder what they want it to look like!

For a bidder responding to an RFT, there are not many variables or options to offer different solutions. Tenders are not normally used for this reason. It could limit flexibility and creativity, which is a problem if an applicant company hasn’t done much research on the available solution. On the other hand, if you know your specific requirements and don’t want to deviate from these specifications, use an RFT.

In short, the best option for most purposes and flexibility in procurement is an RFP. If the requirements for a project are very specific and any deviation from your specifications is not acceptable, use an RFT. However, if a company has limited information about the options available in the market, an EOI could be a good start.