~ by Larissa & Izane
What it is about
The blog post discusses the intricacies of procurement documents like tenders, proposals, and quotes, emphasising the types and importance of each, especially in the South African context.
It outlines the differences between Expressions of Interest (EOI), Requests for Information (RFI), Requests for Quotation (RFQ), Requests for Tender (RFT), and Requests for Proposal (RFP).
It simplifies decision-making by detailing the rules and thresholds for procurement actions under South African public sector guidelines (MFMA and PFMA).
Love them or loathe them, tenders, proposals, and quotes are necessary to win work, which creates and retains jobs. Navigating the world of tenders can be daunting. Amidst the procurement landscape, several key terms—EOI, RFI, RFQ, RFT, and RFP—exist, each playing a key role.
Picture this: stepping into the world of public sector tendering in South Africa is like being a character in your favourite video game, starting on an epic quest. Each document type – EOI, RFI, RFQ, RFT, and RFP – is like a unique level or challenge you need to beat.
The EOI is when you declare to the world, “I’m ready to play.” The RFI is like scouting the level and understanding what challenges you’ll face. Submitting an RFQ is like crafting your gear, making sure you have the right tools (prices and services) to win. The RFT is the map you follow, guiding your journey to ensure you’re heading in the right direction. And lastly, the RFP is the final battle where you show off everything you’ve learned and mastered.
The distinction primarily lies in whether to proceed with a tender, proposal or quote, significantly influenced by the estimated contract value. To clarify this decision-making process, consider the following guidelines laid out for the South African Public Sector:
MFMA (Municipalities) | PFMA (SOEs, National & Provincial departments | |
Petty Cash | R1 up to R2000 | R1 up to R2000 |
RFQ | R2000 up to R30,000 | R2000 up to R1million |
Formal Written Quotations | R30,000 up to R350,000 | N/A |
Tender | Above R350,000 | Above R1 million |
The thresholds will differ in the private sector based on each organisation’s procurement policy. We recommend that if you want to do business with specific companies, you should request their procurement policy and get added to their supplier list or portal.
Let’s demystify these acronyms together, unveiling their differences and why they matter, guiding you toward sales success.
1. EOI – Expression of Interest
An Expression of Interest (EOI) serves as a precursor to a formal procurement process, such as a Request for Tender (RFT) or Request for Proposal (RFP). An EOI aims to identify parties interested in and able to meet specific requirements. It allows potential suppliers to express their interest in providing goods, services, or works. Based on this interest, the issuing organisation may shortlist potential suppliers for more detailed bidding.
Consider the EOI your stage to shine, where you unveil your readiness and capability to meet specified requirements. This phase is your opportunity to pique the interest of potential clients, showcasing that your services or products are not just aligned with their needs but are the best fit.
When engaging with an EOI, view it as more than a preliminary requirement; see it as a strategic tool to distinguish yourself from the field. It’s your moment to communicate your interest and your unique value proposition. Reflect on your strengths, capabilities, and how your offerings align with the outlined requirements. Excellence, after all, is not about meeting expectations but exceeding them.
For suppliers, responding to an EOI is about laying a solid foundation for a potential long-term partnership. It’s an invitation to express interest and commitment to excellence and innovation. Let this be the beginning of a story where your products or services transform an opportunity into a successful partnership.
2. RFI – Request for Information
A Request for Information (RFI) is a preliminary inquiry tool entities utilise to gather information, insights, and capabilities from potential suppliers or industry experts about a particular product, service, or solution. It is a preliminary step that helps define the scope and requirements for a more formal procurement process.
RFIs are not binding requests and do not constitute a commitment to procure goods or services; instead, they are exploratory, aiming to enhance the procuring entity’s understanding of market trends, technological advancements, and available solutions.
In the South African Public Sector context, RFIs may be employed to assess market capabilities, identify potential suppliers, gauge interest in upcoming procurement opportunities, or gather intelligence for strategic decision-making.
Responses to RFIs enable procuring entities to refine their procurement strategies, specifications, and requirements before initiating formal invitations for quotations or proposals.
In the competitive landscape of business opportunities, an RFI is the overture to your symphony of success. As suppliers, an RFI presents a canvas for you to illustrate the panorama of your offerings, expertise, and innovation that powers your business.
This is not a mere inquiry but an invitation to share your story, present your capabilities, and inform potential partners about how you can turn their visions into reality. The RFI is a foundational step, allowing you to lay the groundwork for future collaboration by highlighting your unique strengths and industry foresight.
Imagine every RFI as a pathway to showcase the problem-solving prowess and cutting-edge solutions your business can provide. These initial exchanges are critical as they inform potential clients about who you are as a company and the extraordinary potential you bring to the table. They’re an advantageous precursor to formal procurement calls — your insight today could shape the requests for proposals of tomorrow.
Embrace this chance to influence and engage with prospective clients, setting the stage for lasting partnerships. With each RFI, position your business as the protagonist in your sector’s narrative, demonstrating readiness to elevate and collaborate for mutual triumph.
3. Why EOI or RFI?
An RFI gathers more information and is exploratory, while an EOI is a preliminary screening step in a procurement process that signals a supplier’s interest in participating, potentially leading to an invitation to tender.
EOIs and some RFIs may include clauses excluding companies that do not respond to these initial requests and comply with a later formal procurement process.
4. RFQ – Request for Quotation
A Request for Quotation (RFQ) is a procurement document used to solicit competitive price quotations from suppliers for procuring goods, services, or works for specific company/s. It is not always open to all.
Companies listed on the Central Supplier Database (CSD) in South Africa are invited to participate in RFQs. However, most companies require you to be registered on their supplier database or tender portals to gain access to quote requests. Some organisations post quote requests on their websites.
South African RFQs in Public Sector, as per the PFMA, are generally for transaction values up to R1 million.
Generally, less time is given to respond to an RFQ.
As a supplier poised to scale new heights, the RFQ is a concise yet pivotal call to action directly from companies seeking your products or services. It’s an exclusive channel, a direct line to commercial opportunities designed to elevate your business through concise, competitive offerings.
It is prudent to note that your golden ticket to this opportunity is inclusion on the Central Supplier Database (CSD) in South Africa if you want to bid for public sector work. Registration unlocks the door to these selective RFQ invitations, enabling you to showcase your competitive edge.
Note: It’s also commonplace for individual companies to foster their exclusive list of suppliers or to use their tender portals. Ensure you are enlisted on these platforms to avoid missing out on potential opportunities.
RFQs typically represent transactions of up to R1 million—your assurance of a playing field ripe for impact. Embrace this streamlined approach, bearing in mind the agile response it demands, and seize each RFQ with readiness. See each RFQ as more than a document – it’s your stage to amplify your potential value.
5. RFT – Request for Tender
A Request for Tender (RFT) is a formal solicitation document issued by a procuring entity, typically a government department, municipality, or agency, to invite potential suppliers to submit competitive bids for goods or services. This is usually for goods and/or services for which the estimated cost is anticipated to exceed the threshold for quotations.
RFTs outline detailed requirements, specifications, evaluation criteria, and contractual terms that suppliers must adhere to when preparing and submitting bids.
The public sector must advertise all RFT/Ps on its website, in newspapers, and on the e-Tenders Portal. As a result, opportunities for RFTs are easy to source for your review.
6. RFP – Request for Proposal
Request for Proposal (RFP) is a formal request for bidders to submit innovative proposals to solve a company’s problem. RFPs usually follow the same process as RFTs.
RFPs are often employed for complex, high-value purchases where the evaluation criteria extend beyond price considerations to encompass technical expertise, innovation, past performance, and risk management capabilities.
In the South African government context, RFPs play a pivotal role in fostering competitive dialogue and promoting value-for-money outcomes by allowing suppliers to demonstrate their capabilities and tailor their proposals to meet the procuring entity’s unique requirements.
The evaluation of RFP responses entails a rigorous assessment process, typically involving a multidisciplinary evaluation committee/panel tasked with scoring and ranking proposals based on predefined criteria and weighting factors.
7. Why RFT or RFP?
The main difference is the purpose of each document. An RFT is often more prescriptive when the organisation knows its wants and needs.
An RFP is often used when an organisation seeks a solution to a problem or project and is open to suggestions on how best to accomplish it.
Venture forth, brave supplier, into the arena where the RFT or RFP is your call to action—a structured invitation from entities to forward your finest competitive bids for projects of grand scale.
The RFT is an extensive document and a beacon for suppliers, brimming with specific demands, conditions, and criteria—all a blueprint for the venture you intend to embark upon. The essence is meticulous; every clause and requirement maps the promise of quality and excellence you, an aspiring partner, stand to fulfil.
Now, ready yourself for the evaluative gauntlet that is the RFT and RFP journey, which the typical evaluation process requires:
Compliance: At first, you demonstrate your alignment with the rules of the realm—be it through your status on the Central Supplier Database, your valid tax records, or your carefully signed tender documents. This is your testament to your preparedness and attention to legislative decorum.
Functionality and Technical Criteria: Next, articulate the might of your methods and the robustness of your services—this is the stage where the lens focuses on how your offerings mesh with the work request at hand, honed by evidence as solid as the foundations of your confidence.
Price and Preference Scoring: Passing the first two stages with flying colours grants you passage to scrutinising your pricing strategy, all weighed on the balance scales of the 80/20 or 90/10 preference point system—your value proposition in numbers.
Due Diligence: In some sagas—not all—a final test awaits. Here, you may be asked to present your strategy and vision in person to validate your claims and demonstrate your readiness with physical proofs or demonstrations.
8. Panel bid or tender
A panel bid in South Africa refers to a procurement method where an organisation seeks to establish a panel of pre-qualified suppliers for specific goods or services. Through a competitive bidding or tender process, suppliers submit their proposals to be considered for inclusion on the panel.
Once on the panel, suppliers may be called upon to provide goods or services as needed without going through a separate bidding process each time.
This method is designed to streamline procurement by reducing the time and expense associated with repeated bidding processes and to ensure that the purchaser has access to reliable, quality suppliers who have already been assessed and meet specific criteria.
In the dynamic landscape of South African business, a panel bid presents a supreme opportunity for suppliers like you to showcase your prowess and secure a place among a select group of vendors preferred by a buyer—usually a large corporation or government entity.
Envision a panel bid as a tournament where buyers seek the best suppliers to form a panel—a roster of pre-qualified heroes ready to answer the call when specific needs arise. It is more than a mere contract; it is an alliance, a covenant of trust and mutual benefit allowing for recurring business engagements without needing a fresh tender each time.
Through the panel bid process, a buyer will solicit proposals from skilled suppliers such as yourself, intending to curate an elite list that meets a wide range of service or product requirements. It is an accolade to be considered and an even greater one to be chosen.
9. Public Sector’s role in procurement
The government is a corporate citizen that must comply with the country’s laws. Therefore, the government cannot and must not appoint companies that do not comply with acts of parliament that govern the industries in which they operate.
Failure to adhere to the requisite regulatory standards indisputably leads to exclusion from bid consideration. This integral compliance encompasses a spectrum of legislation, including the Municipal Finance Management Act, Public Finance Management Act, and Preferential Procurement Policy Framework Act, each serving to sculpt a transparent and fair procurement landscape.
Suppliers must offer comprehensive proposals, delineating their pricing strategies, delivery frameworks, and any other predicates dictated by the procurement requisition. This procurement process, facilitated through these various requests, offers a structured approach to securing the most advantageous procurement outcomes, favouring not merely the most economical bids but those that cumulatively score highest on predefined criteria of price and empowerment.
10. In summary
So, after dodging traps, battling monsters, and solving puzzles (navigating through EOIs, RFIs, RFQs, RFTs, and RFPs), reaching the end of the quest in the tendering world feels just as rewarding as completing that ultimate quest in a game.
Much like in a game, where you gather loot, level up, and earn achievements, winning a tender means your company succeeds – gaining business, profit, and the opportunity to embark on more adventurous projects.
Remember, every step you conquer builds you up for the next one. And just like in our favourite games, sometimes it takes a few tries and a lot of learning, but the victory is always worth the effort.
What’s more, you don’t have to undertake this quest alone; you have nFold, an expert ally, to help navigate and strategise your path in this competitive arena. So, gear up, brave quester. Your tendering adventure is just beginning, and the rewards await you to claim them.
Together, let’s turn the page to your next triumphant chapter.
“Solving niche challenges founders face”.
Illustrator: Lisa Williams (Instagram: @artist_llw)