A Request for Proposals (RFP) can be used when the project team knows what it wants to achieve, but would like prospective partners to use their experience, technical capabilities and creativity to identify how the local government's objectives can best be met. One of the main differences between an RFP and an invitation to tender is that in an RFP, the lowest bidder does not always gain the contract. Rather, the local government is seeking value in the proposal. Value comes in a number of forms. In the case of submissions to an RFP, value can come through the creation of operating efficiency, cost-saving measures, or innovations that alter existing processes to create better efficiency and cost savings.
The Request for Proposals can be issued through either a one-stage or two-stage process.
• One-Stage Process
A one-stage RFP process for selecting a private partner can be issued to select parties known to the local government to have the capability to be successful partners.
A one-stage process may be appropriate for a local government in a number of circumstances, including:
- When only a limited number of suppliers have the resources and capabilities to be a successful partner.
- The project must be implemented under a tight timeframe.
- A limited number of potential private partners means that proponents have a better chance of gaining the contract. This provides incentive for private partners to undertake the considerable expense of submitting a proposal.
- The local government is not able to spend a large amount of funds on the process.
• Two-Stage Process
The two-stage RFP process involves an initial stage that screens potential partners. Generally, this first stage involves the issuance of a Request for Expressions of Interest (RFEI) or a Request for Qualifications (RFQ). This screening allows the project team and the evaluation committee a chance to initially consider a wide range of proponents and then to narrow the field to those most qualified.
The RFEI approach is used where local government has identified its objectives but may not have fully defined the project or service to be delivered. The RFEI is intended to provide local government with sufficient information to draft a clear RFP. After expressions of interest have been received, the project team may decide to hold a meeting with proponents where the proposed public private partnership is discussed in more detail. Partnerships and alliances between private sector firms could form at these meetings. This reduces the potential number of submissions received at the RFP stage.
The use of RFEIs can assist local government in two ways:
- it reduces the time and expense involved in evaluating a larger number of proposals
- it improves the quality of proposals
Following the meeting with potential partners and using the submissions received in response to the RFEI, the project team is in a good position to draft a clear, well thought-out RFP. In this sense, the RFEI is used to gain information to help in drafting the RFP.
A RFQ is used for different reasons and in response to different circumstances than an RFEI. The RFQ is used in situations where the local government and the project team have a more defined project but do not know if there are any private sector partners with the resources, experience or interest to undertake the project.
The RFQ document is more specific than the RFEI document. The RFQ document generally seeks information pertaining to a potential partner's:
- name
- qualifications
- relevant experience
- management experience
- project management track record
- financial resources
- long-term financial stability and company viability
- references
The RFQ process is not designed to gain answers as to how the project will be completed. Rather, the RFQ process is used as a shortlisting tool to pre-qualify selected potential partners who will then receive the RFP.
Local governments should use the two-step process in the following situations:
- where qualified firms would not take the time and expense of preparing a response to an RFP if there were too many other firms submitting
- there is an advantage to initially inviting a large number of firms and then narrowing the field to those most qualified
- the required proposal will be time-consuming and expensive for the proponent to prepare
- the project is large and complex and the local government's evaluation panel will need time to fully examine and evaluate the proposals
- the RFP process will involve the divulgence of information that is sensitive or even confidential-with a limited number of firms receiving the RFP, the number of people with access to this information can be limited and monitored
The Canadian Council for Public-Private Partnerships notes that responses to RFPs (as well as RFEIs and RFQs) are costly in terms of time and expenditures for the private sector. As such, local government should never use the RFP process when there is no real commitment to delivering a project through the use of a public private partnership.
More information about the RFP process can be found in section 7 of this guide.