RFP and RFx definitions: A procurement glossary from A-Z
So, what is an RFx? Great question. An RFx is a catch-all term that refers to any document that is a ‘request for’ something. It represents documents like requests for proposals (RFPs), request for quotations (RFQs) and more. All of these RFP definitions — and lots of others — are commonly used in the procurement process.
Every industry has a language of its own and the RFP and procurement world is no different. Procurement professionals, and the people who interact with them, use a vocabulary full of RFP abbreviations, acronyms, synonyms and specialized terminology. The industry-specific terms can be difficult to navigate, no matter how many RFxs you’ve issued or responded to.
As our business grows, I regularly need to offer a rundown of RFx definitions and procurement jargon for new hires. To help out, I created this RFx glossary to explain RFP common terms for easy reference. Explore each definition and all of the related terms to become an expert in all things RFP, RFx and beyond.
A – B
Acceptance criteria — Factors used to determine whether a product or service meets the required standard, frequently used in software procurement.
Agreement — A legally binding contract, signed and executed by both the buyer and seller.
Alternate response — A substitute response representing a significant, but intentional variation to a provision or clause of a solicitation by a vendor.
APMP — The Association of Proposal Management Professionals is an international professional organization that educates and advises procurement professionals.
For more information about the association and their events, visit APMP.org.
Approved supplier list — A list of suppliers who have been vetted and met the established criteria. This can include financial stability, compliance, insurance, health and safety policies and so on.
APS— American Purchasing Society. An organization of buyers, purchasing managers, executives, and others interested in the purchasing profession. The organization focuses on providing training and education through certification programs.
For more information about the APS or their certifications, visit american-purchasing.com.
Balanced scorecard — A tool to measure vendor performance that factors in multiple variables. The variables may be equally important or have weighted degrees of importance.
Benchmarking — Comparing an element of one business, such as price, quality or service, against another which can be part of vendor selection.
Best and final offer (BAFO) — A request for the vendor to make a revised pricing proposal with their best possible price.
Best value — The end result of a successful RFP and procurement process. An outcome that perfectly balances price and quality to meet the buyer’s needs.
Bid — The portion of the proposal that offers a price for goods or services.
Bidder — Also known as a tenderer, this is a potential supplier who responds to the RFP with a completed proposal including a bid.
Boilerplate — Text and graphic responses that are stored in a knowledge base for repeated use in multiple proposals.
Business case — An internal document that presents an argument for pursuing a particular RFP opportunity and focuses on the expected benefits of potentially winning the bid. The same term may also be used to describe a section of a proposal section to give the customer justification for accepting the bid and making the purchase.
Buyer — The party that intends to buy a service or product and issues an RFP to evaluate their options, also referred to as an issuer.
C – D
Closing date — The due date when all proposal submissions must be completed and returned to the issuer or buyer.
Competitive bidding — Used in government, this is a public bid that solicits companies to submit their best proposal to compete for a specific project. Often legally required, competitive bidding is intended to create an open, fair and transparent procurement process.
Compliance checklist — A list of specific customer requirements. The list is created by splitting complex RFP questions into individual requirements.
Cooperative purchasing — When two or more business or government units combine similar requirements to issue an RFP. The combined entity takes advantage of better terms due to higher volume and/or to reduced administrative expenses.
CPO — Chief procurement officer or chief procurement and supply director. The person responsible for managing overall procurement and supply within an organization.
CPP — Certified Purchasing Professional, a designation bestowed by the American Purchasing Society in recognition of purchasing knowledge, experience and integrity. The CPP is also a prerequisite for the CPPM, Certified Professional Purchasing Manager.
Procurement professionals interested in applying for professional certifications can learn more at the American Purchasing Society’s website.
DDQ — A due diligence questionnaire is a tool used by buyers to evaluate potential vendors for risk.
Explore the Ultimate due diligence questionnaire guide for more information.
Debarment — When a person or business is no longer allowed to receive RFPs. Most often Issued by government entities after an offense or failure to meet performance expectations, the debarment may be temporary or permanent.
Due diligence — An assessment of the risks involved in the supply chain and procurement process. It often takes into account company stability, policies and employee training and is evaluated using a due diligence questionnaire.
Vendor due diligence is crucial to protect businesses from risk, check out this blog post to explore vendor due diligence best practices.
E – K
E-sourcing — Also known as e-procurement. An online business-to-business procurement process using web-based applications where buyers locate potential suppliers, review products and select products, and complete transactions directly over the internet.
Elevator pitch — A concise explanation of the benefits of doing business with a particular vendor.
Evaluation of responses — An assessment of proposal responses that determines each vendor’s responsibility, ability to meet requirements and other factors listed in the RFP.
Executive summary — A short summary of the key proposal components that is written for senior-level decision makers in the issuer’s organization. Also known as a management summary.
Write an awesome executive summary with this guide: How To Develop a Stand-out Executive Summary.
IFB — Invitation to bid, also called a sealed bid. Often it is competitive, and the lowest bid will win.
Imperfect competition — When many businesses are competing to win an RFP but each is selling a slightly different product, which makes comparisons difficult.
Issuer — The business or person that creates and sends an RFP to vendors, soliciting proposals with the intent to buy a product or service.
Issues — Concerns of the buyer that must be addressed by the bidder. Issues may or may not directly stated in the RFP and may be emotional rather than concrete.
ITT — Invitation to tender, often used in construction projects with many specifications, performance expectations and requirements for vendors to meet.
Joint venture — When two or more businesses partner to deliver a proposal, win the business and deliver the agreed-upon products or services.
Knowledge base — A centralized location where proposal content is stored, indexed and retrieved.
Knowledge management — The practice of regularly updating, organizing, indexing and managing proposal content within a knowledge base.
Businesses that issue or respond to many RFPs a year may use a knowledge base built in Excel or a collaborative knowledge base in an RFP software platform. Explore knowledge base best practices to learn more.
KPI — Key performance indicator, measurable values that can be monitored to determine levels of achievement. Useful for successful vendor evaluations and vendor management.
L – P
Life cycle cost— An evaluation that determines the cost of acquisition, operation, maintenance, and disposal of items. Helpful in determining whether or not to enter into the procurement process or renew existing contracts.
Lowest responsible vendor — The lowest-priced vendor with acceptable performance, reputation and financial evaluations.
Motivators — Motivators to buy, the fundamental reasons behind the customer’s need to make a purchase. Motivators are the underlying reasons an RFP are issued.
Multiple award — When a contract is granted to more than one bidder who meets the requirements of an RFP.
NASPO — National Association of State Purchasing Officials. A non-profit association that helps state procurement through education, professional development and research.
NASPO offers a variety of tools and resources for government procurement professionals. Visit the NASPO website to learn more.
NIGP — National Institute of Governmental Purchasing: The Institute for Public Procurement is an association that promotes best practices and professional development for government procurement professionals.
Discover more about NIGP here.
No bid — The response when a selected vendor does not wish to submit a proposal. The response allows the vendor to prevent potential suspension for failure to submit a response.
Offer — An invitation to enter into a legal contract.
Preference — An advantage granted to a vendor because of the vendor’s location or other business classifications. For instance, small businesses or minority-owned organizations.
Pricing tables — A tool that allows buyers to collect, analyze and present vendor pricing data in one clear format to determine which vendor best suits the organization or client’s needs.
Explore how RFP360 empowers apples-to-apples comparisons with vendor pricing tables in this blog: With features like RFP pricing tables, RFP software offers real digital transformation.
Proactive proposal — Also called an unsolicited proposal. A proposal that is created without an RFP, often following a discussion with the potential customer.
Procurement process — The process of obtaining materials and services. The process includes defining requirements, issuing an RFP, selecting a vendor and contracting. Also includes inventory control, traffic and transportation, receiving, inspection and disposal operations.
The procurement process can be complicated, learn more about it here:The ultimate procurement process guide.
Proposal — An offer, submitted in response to a request from an organization, that provides a solution to a problem, requirement or objective as outlined in the RFP.
Proposal manager — Person responsible for proposal responses including scheduling, coordinating with subject matter experts to create responses, reviews, submission and strategy implementation.
Learn more about a career as a proposal manager here: The Ultimate Guide to Proposal Managers Career Path: Salaries, Responsibilities, Advice.
Public procurement — Government purchasing funded or supported through taxation.
Q – R
Qualified bid — A proposal where the potential supplier has exempted themselves from one or more of the requirements of the RFP. The proposal should state exactly why it does not meet the requirements.
Qualified vendor — Also known as a responsible vendor. A vendor that meets minimum requirements in business competence, reputation, financial ability and product quality and has earned placement on the vendor list.
Responder — The person or business that submits a response to an RFP.
Response — The offer received from a vendor in response to an issued RFP. Commonly referred to as offers, bids, quotes or proposals.
Responsive bidder — A bidder whose proposal meets the exact specifications and terms set out in the invitation for bids.
RFA — Request for application, an announcement that grant funding is available. An RFA informs researchers and organizations that they may present grant proposals.
RFB — Request for bid. The same as an RFP, request for proposal. Responses are not generally subject to negotiation.
RFI — Request for information, a document used to collect information about suppliers, often before a formal procurement process. May be used as a part of the vendor selection process.
When a business has a challenge but isn’t sure what solutions might meet the need an RFI is a good start. Check out these RFI templates and examples.
RFP — Request for proposal, a document that requests a proposal from selected vendors. Price is generally a factor in determining the vendor of choice, but not the only consideration. Also known as an RFT, request for tender in Europe.
Explore the basics of RFPs in this blog post: What does it mean to RFP.
RFP cover letter — A one-page document introducing your proposal to the buyer.
An RFP cover letter gives the buyer the first impression of your business. Explore how to write a memorable cover letter.
RFP process — Also referred to as the proposal process. A systematic series of actions and steps designed to help businesses win bids.
Inefficiency within the RFP process has a direct impact on revenue, read this blog about the cost of inefficient RFP processes.
RFP technology — RFP software, often cloud-based programs that offer a digital knowledge base and automated responses with internal and external collaboration.
RFP technology improves efficiency by reusing previous successful answers and automating responses. Use this quick guide to explore RFP technology: How to Find the Best RFP Management Software
RFQ — A request for quotation, is a request for vendors to submit a quote for a particular service.
Learn more about what an RFQ is, when to use it and how to write one with this blog: RFQ templates and examples.
RFx — Collective term that all references to Request for Information (RFI), Request for Proposal (RFP), Request for Quote (RFQ), Request for Bid (RFB) and more.
It can be a challenge to know which RFx tool is right for what you need. Learn more about each type of request in this blog: RFI vs RFQ vs RFP: Which Should It Be?
ROI — Return on investment is a way to evaluate the effectiveness of an investment. ROI tries to quantify the return on a particular investment, relative to the investment’s cost.
To explore how to calculate the ROI of RFP software, download this ebook: Measuring the value RFP software.
S – Z
Security questionnaire — Part of the procurement process to evaluate risk with questions about security controls, business continuity and security policies.
Security questionnaires must delay technology sales but must before the initial purchase as well as annually. But RFP technology can help complete security questionnaires faster.
Solicitation — The process of communicating procurement requirements and requesting responses or bids from interested vendors. Also called a request for bid and request for proposal.
Spend analysis — Spend analysis is the practice of collecting, classifying and analyzing data to decrease procurement costs, improve efficiency and monitor compliance.
Strategic sourcing — A procurement process that uses ongoing evaluation of the purchasing activities of a company to reduce cost and improve quality.
Strategic sourcing is a key part of any vendor management initiative. Explore how strategic sourcing allows organizations to bridge the gap between needs and solutions in this blog post: Your Ultimate Guide to Strategic Sourcing.
Tender — The process that allows governments and financial institutions to solicit bids for large projects. Each tender has a specific deadline for submission. Used commonly in Europe, referred to as a proposal in North America.
Unsuccessful vendor — An unselected vendor. The proposal may be declined due to price, quality, failure to comply with specifications and so on.
Vendor — Also known as a seller, responder or bidder. The person or vendor responding to the RFP with the goal of providing a service or product.
Vendor management — Also known as supplier relationship management, the practice of improving a vendor’s impact on the buyer’s business by working collaboratively and developing new processes.
Every business depends on relationships, explore how to manage vendor relationships with this blog: 11 Procurement Experts Give Advice on Improving Supplier Relationship Management
Vendor evaluation — A part of vendor management. The periodic process of evaluating and approving new and old suppliers based on how well they meet the business’s needs.
To properly evaluate a vendor, you must establish KPIs and determine the vendor’s value and quality. Explore these tips and tools for vendor evaluation: Evaluate your vendors’ performance: Tips, tools and resources to get the best for your business
Weighted scoring — The practice of setting weights or point values for sections in an RFP.
Check out this infographic about weighted scoring: How to set up weighted scoring for RFPs.
Zero-sum game — An interaction where every gain by one party is an equal loss to the other, so the net gain is zero, also a word to include in your A-Z guide so you have a Z.
RFx definition we missed?
The terminology and definitions used in procurement are always changing, evolving and expanding as time goes on. I’m sure that in a year or so, our RFx definitions will almost certainly need to be expanded to include other common request documents. We will strive to continuously update this glossary to offer quick, easy answers to common questions like, “What is RFx?” and “What is an RFI?”
I know I haven’t covered every relevant and related term in this RFP glossary. If I’ve missed a key term or omitted some nuance in these RFP definitions, please reach out and let me know. We’d all be thrilled to hear from you on Twitter or LinkedIn.