Policy, Program and Procedures

I am tasked with revamping our RFP (Request for Proposal) policy and procedures. 

Currently, we require RFPs to be completed every 5 years from the start of the contract. We have experienced a lot of redundancy in this requirement creating frustration due to the amount of time, effort, and resources the RFP process requires. Recently, we have created thresholds around which vendors require informal RFPs (RFIs & RFQs) vs. the full vendor evaluation process (Weighted Requirements, Demos, Due Diligence, etc.) 

I would like to fully remove the 5-year requirement from our policy and replace with thresholds such as (Contract costs, performance evaluations, etc.)

What are your triggers or thresholds for formal RFPs?  How did you decide on a cost threshold?

Thank you so much in advance.

Hi there, so a lot depends on your specific organization and the products and services you purchase, but I have included what I believe to be the most common triggers.

Common Triggers for Formal RFPs:

1. Contract Value: High-value contracts often warrant a formal RFP to ensure competitive pricing and quality, with the specific threshold varying based on the organization's budget and procurement policies.

2. Performance Evaluations: In instances where a vendor consistently underperforms or fails to meet contractual obligations, a formal RFP may be initiated to identify a more reliable supplier.

3. Regulatory or Compliance Changes: The introduction of new laws or regulations impacting operations may necessitate a formal RFP to ensure compliance.

4. Strategic Initiatives: Major projects or strategic shifts, such as entering a new market or launching a new product, can prompt the need for a formal RFP.

5. Technology Upgrades: With the obsolescence of existing technology or the emergence of new technology offering significant advantages, a formal RFP can help in identifying the best solution.

 Deciding on a Cost Threshold:

1. Budget Analysis: It's essential to review your organization's budget to determine significant expenditures. This will help set a realistic threshold for raising a formal RFP when necessary.

2. Historical Data: Analyzing past procurement data to identify the cost levels at which formal RFPs have provided the most value can assist in setting an effective threshold.

3. Risk Assessment: Evaluating the risks associated with high-value contracts is crucial, as higher costs often correlate with greater risks, making the formal RFP process more critical.

Example Thresholds:

- Contract Value: Formal RFPs initiated for contracts over $300,000.

- Performance: Formal RFPs if a vendor scores below 80% in performance evaluations for two consecutive quarters.

- Regulatory Changes: Formal RFPs triggered by significant regulatory changes impacting operations.

Those are some ideas for RFP triggers and thresholds that might help you reduce redundancy in your process so resources can be focused on the most impactful procurement activities. I would love to hear from other members with sourcing and procurement experience to share.