Receiving an RFP usually implies that someone somewhere recognizes certain skills, attributes and experience that would benefit whatever program is being advanced, especially if the RFP recipients are identified individually and hand-selected. So in a way, it’s public acknowledgement of the work a company or person has done up to this point. That’s a good thing. But the process is essentially the same as when a person applies for a job: at the onset, it may be a perfect match. It’s only when the details are presented, does the real selection process begin. Therein lies the risk.
Some of the by-product risks of responding to an RFP include: cost risk, exposure risk and image (reputation) risk. Some of the risks are tangible, such as cost risk. Other types – exposure risk and image (reputation) risk - are less tangible at face value but equally as impactful, both short-term and long-term.
Cost risk includes the very basic aspects of creating and submitting a response. There is real cost associated with the materials used as part of the response, including paper, copy and reproduction costs, delivery charges and the cost of utilities to provide power to copy machines, computers, space lighting and HVAC. There is also cost associated with the manpower and staffing required to appropriately and completely respond in all the areas that require a response. If that work cannot be completed during regular business hours, then overtime cost may be generated. All that work is being done “at risk”, which means the responder knows those costs may not be reimbursed or “baked into” the price of their work if they are not ultimately selected as part of the project team. In truth, those costs may never be recovered, so they are just the cost of doing business. The cost of travel associated with face-to-face interviews and company presentations can create additional risk, which needs to be evaluated and accepted by the responder as part of the price paid for playing the game. But because of the nature of the RFP selection process, some material cost will belong exclusively to the responder.
Exposure is another type of risk that can be created as part of the RFP response process. In an effort to be forthright and accurately represent capabilities and capacity, the responder may intentionally (or unintentionally) reveal gaps in their staffing, skill sets, experience, financial health or team collaboration. Many times, RFP authors have a general idea of what constitutes an ideal team, but does not know for sure until one is seen. That team composition then becomes the metric by which every other team is measured. Even if the responder acknowledges those gaps, with the promise to swiftly access suitable talent and flesh out their team, the reality is at that exact moment, the desired capacity and capability simply may not exist. Additionally, specialized talent is usually not pursued until it is needed so it stands to reason that every RFP responder is considering the same outside expertise and that just complicates the situation even more. Exposure can also occur when capabilities, processes, and other items specific to a particular responder are made public, in which case competitors may decide they are lacking in those areas and incorporate those defining elements into their own culture. This leveling of the playing field condition reduces the number of factors which may set one…