Public sector organizations need to procure goods, services and works to achieve their goals and objectives and to run their organizations. The initial step for procurement of goods, services and works is the solicitation documents. There are different types of solicitation methods and documents used for different types of requirements. Now, the question arises, what is solicitation?
The dictionary meaning of solicitation is ‘the act of asking for or trying to obtain something from someone’.
Solicitation comes from solicit, which means “to request,” or “to entreat.” So solicitation is the act of requesting.
In procurement, solicitation is the process of seeking information, proposals, and quotations from suppliers, contractors or consultants. While solicitations can be verbal, quality, consistency & commitment is enhanced if the process is formalized as a written or electronic document.
Index
Types of Solicitations Documents
Generally, three standard types of solicitation documents are used in public procurement.
- Request for Quotation (RFQ)
- Request for Bids (RFB)/ Invitation to Bid (ITB)
- Request for Proposal (RFP)
- Expression of Interest (EOI)
Request for Quotation (RFQ)
It is an informant method of solicitation, in which, quotations are requested from the prospective suppliers or contractors for supply of goods, materials or delivery of some work. Normally, minimum three quotations are required to conclude the procedure. The suppliers or contractor, who have quoted minimum price is awarded the contract. This procedure is generally adopted for supply of off the self-goods, delivery of routine and minor works or services or procurement of works, services or goods of less value. Generally, few best suppliers or contractors available in market are selected for requesting quotations. Some organizations have a ready- made list of pre- qualified/ shortlisted suppliers/ contractors from which the quotations are requested. Usually, the organizations put a threshold limit on value of goods, works & services, below which, this method of solicitation may be used. This is the most flexible and least formal method that can be used for procuring goods services and/or works with standard specifications and products which are readily available on the market.
Request for Bids (RFB)/ Invitation to Bid (ITB)
It is a formal invitation to bidders to submit a bid for the requirements that are clearly defined and are above a minimum value specified by the organization. The contract is awarded to the bidder who have quoted the minimum price, subjected to the condition that he/ she has met minimum technical qualification criteria. The Request for Bids (RFB) or Invitation to Bid (ITB) may be of following types:
Single Stage One Envelope
The bidders are asked to submit their technical as well as financial proposals in one envelope only. The bidder who has quoted the lowest bid (L1 bidder) is checked for his/ her technical qualification. L1 bidder is awarded the contract if he is technically qualified, otherwise the next lowest bidder (L2 bidder) is checked for technical qualification. The process continues till the selection of the suitable bidder.
Single Stage Two Envelope
Sometimes, the bidders are asked to submit their bids in two envelopes. One is technical and other is financial bid. The technical bid is evaluated first and the financial bid of only technically qualified bidders is opened. The least quoted bidder (L1 bidders) is awarded the contract.
Two Stage Bidding
In this process, the evaluation of bidders is made in two stage. At the first stage, the bidders are asked to submit their technical proposals. After evaluation of technical proposals as per the pre- specified criteria, the suitable bidders are selected to qualify for the next stage. The bidders found suitable at the first stage are asked to submit their financial proposals. The bidders, who have quoted the lowest price is awarded the contract.
Request for Proposal (RFP)
This type of solicitation approach is suitable for the requirements, which are not fully definable at the time of solicitation and where innovation and expertise of the proposer is required for better solutions of the requirement. In this solicitation method, a formal invitation is requested form bidders for such type of requirements. In this type of solicitation, price is not the only criteria for awarding contract. The technical expertise and experience of the bidder is also evaluated. The bidders are requested to submit their proposals in two envelopes, one is technical proposal and the other is financial proposal. The technical proposal is evaluated first and score is allocated as per the technical qualification criteria. Subsequently, the financial proposal is evaluated and score is determined as per the method given in RFP document. Then the combined score is calculated as per the procedure specified in the RFP document. Generally, weightage is given to both the technical and financial scores and combined score is calculated.
The weightage allocated to technical and qualification score depends on the complexity of the requirement and level of innovation and expertise required for the assignment. For research and development kind of assignments, where it is very difficult to define the outcome and very high level of expertise and innovation is sought from the proposer, there may be 100% weightage to technical proposal and no weightage to financial proposal.
The bidder, who have secure the highest score (also known as ‘Highest Qualified Bidder, Q1 Bidder) is awarded the assignment.
Request for Expression of Interest (REOI)
Request for expression of interest (REOI) is the formal invitation to prospective bidders to express their interest for a particular assignment. This procedure is used for the requirements which cannot be defined clearly at the initial stage and involvement of bidders is necessary to find the solution of the requirement. REOI is generally used as an initial step for ‘Request for Proposal (RFP)’ method through which the prospective bidders are shortlisted based on their qualification and experience. The RFP document is issued to the bidders, shortlisted at the REOI stage.
Comparison of Various Methods of Solicitations
| Request for Quotation (RFQ) | Request for Bid (RFB)/ Invitation to Bid (ITB) | Request for Proposal (RFP) | Request for Expression of Interest (REOI) | |
| Flexibility | Most flexible method | Not flexible | Not flexible | Flexible up to some extent |
| Approach | Informal | Formal | Formal | Formal |
| Type of Requirement | Off the shelf goods, routine works and services of low value | Specifications and descriptions of the requirement are clearly defined and complete | The specifications and descriptions of the requirement cannot be defined at the time of bidding | The specifications and descriptions of the requirement cannot be defined at the time of bidding |
| Financial Bid Weightage | Full weightage | Full weightage | Depends on the complexity of the requirement and level of innovation and expertise required | Financial proposal is not asked |
| Value of goods/ works/ services being procured | Works, goods & services of low value | Works, goods & services of value more than a pre- specified limit | Works, goods & services of value more than a pre- specified limit | Works, goods & services of value more than a pre- specified limit |
| Involvement of Bidder | No discussion with the bidder is required | No discussion with the bidder is required | Bidders involvement is needed right from the beginning | Bidders involvement is not required |
Summary
Solicitation methods are used to seek information, quotations, bids or proposals form the suppliers and contractors. While, for small value goods & routine works/ services, informal solicitation methods like ‘Request for Quotations’ are applied, for the complex works & services, where the requirement specifications are not defined, the solicitations methods like ‘Request for Proposals (RFP)’ may be employed. For procurement of works and services, where the output is not defined or where the specifications and description of procurement cannot be determined, score of both technical & financial proposals is considered for making award to a bidder. Request for Proposal (RFP)’ is used in such cases. The allocation of weightage to technical and financial score depends on the complexity of the requirement and level of innovation and expertise required for such procurements. The solicitation method to be used is decided keeping in view of the factors like type of purchase to be made, value of goods, works or services to be procured, complexity of the requirement, etc.
Also read: EPC Contract! Obligation of Parties and Features
