Ultimate Guide to Bid Terminology

Like any specialist subject, bidding has its own language and terminology, including abbreviations and acronyms, which can be a mystery to the uninitiated. Even those within the industry have differing opinions on the correct use of various terms, which has led to ongoing debate on many bid forums. Moreover, at times, this leads to confusion during the busiest times of the bid production.

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.

Scope of the Terminology Covered

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 Acquisitionand is a discrete part of the overall sales process, often referred to as Competitive Tendering. Competitive tendering can be broken down into three stages:

  • Capture Planning
  • Bid Phase
  • Post Submission

For the purposes of this document, we have restricted the content to the bid phase.

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 anInvitation 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).

Bid Production

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.

  • Response, Bid, Tender, Proposal – these are terms commonly used to describe the document that is sent to the customer in response to the solicitation document.
  • Storyboard– this is a term more commonly used in the film industry, but is a process used to develop the structure of the bid where this has not been defined by the customer.
  • Response Approach– when the customer has defined the structure, by using discrete question/answer formats, these are used to plan what is needed to produce each response.
  • Response Outline– this is the first draft of the response and simply consists of the headings to be used and some bullet points to indicate the content that needs to be produced.
  • Win Themes– these are messages to be interlaced within the response to help convince the customer of the efficacy of the bidder’s solution.
  • Discriminator– these are the specific details of the bidder’s offer that sets them apart from the competition.
  • Statement of Requirements (SOR) – this is a list of the specific details of what is required to be delivered by the customer.
  • Statement of Work (SOW) – this is a list of how the customer expects the contract to be delivered.
  • Hot Buttons– these are intelligence-based assumptions of things that are important to the customer, but have not or cannot be specified in the SOR or SOW.
  • Pink Team Review– this is a checkpoint of the progress of the draft response to ensure it is answering all aspects of the question.
  • Red Team Review– this is the final checkpoint of the response to ensure it is complete, compelling and consistent across the entire response.
  • Clarification Questions (CQs)– these are asked by the bidders to clear up any uncertainties regarding the solicitation document.