The importance of understanding the language cannot be underestimated, especially for those who are new to the industry. The purpose of this document is to help you navigate your way through the terminology used.
Where does bid terminology start and end? We’ve looked at this from the point of view of the bidding entity, rather than the buying entity. It is known as Contract Acquisition and is a discrete part of the overall sales process, often referred to as Competitive Tendering. Competitive tendering can be broken down into three stages:
For the purposes of this document, we have restricted the content to the bid phase.
So, your organisation has decided to compete for a contract; this is often referred to as a pursuit. Once the customer has decided to let a contract, they will ask for an Expression of Interest (EOI) from anyone interested in pursuing the opportunity. The response to this is usually a simple document with contact details. However, for major contracts, the customer may ask for some particulars to ensure the organisations are appropriate before they send out further information. From here, the selection process proper commences.
It starts with a Pre-Qualification Questionnaire (PQQ), which asks for specific details about the bidding entity (this could be a company, a joint-venture or a consortium) and its capability and capacity to deliver the contract, should they be selected. For larger contracts, it can include an outline of the type of solution that would be proposed.
Having selected those bidding entities considered appropriate to be invited to bid, the customer will issue a solicitation document. This is where the confusion really starts and unfortunately, the terms here are often misused. The key differences are based on the customer’s requirements. When the customer has a firm set of requirements, together with a fixed method of delivery, they will ask for a quote, known as a Request for Quotation (RFQ) or an Invitation to Tender (ITT). When the customer has a set of requirements based on outcomes, rather than a fixed method of delivery, they’re looking for the most appropriate solution to deliver the contract and hence, they issue a Request for Proposal (RFP). When the customer is less clear on the solution it expects and wants to discuss possible solutions, it could issue the RFP under what’s known as Competitive Dialogue, or more commonly now, an Invitation to Negotiate (ITN).
Depending on the methodology used, there are a multitude of terms. We’ve selected the most common and indicated those that are either similar or synonymous.