What is a Request for Quote (RFQ)?

Request for Quote is a document issued by an organization or a company inviting suppliers or vendors to bid for supplying a specific product or service. When a company needs to procure some product or service from outside suppliers, it issues a Request for Quote and sends it out to the potential suppliers eliciting quotation for a product or service. A Request for Quote is also known as Calls for Bid or Invitation for Bid.

When is a Request for Quotation Used?

The soliciting company, having a clear idea about the specifications and amount of the products or services needed, issues an RFQ inviting the quotes from the suppliers. It enables them to compare the rates provided by different bidders and select the best one. As the desired products or services are standardized and uniform, it becomes easy for the company to compare the quotations received from different suppliers. Suppose a media house needs 50 cameras with some particular specifications. They will send out a Request for Quotes to different chosen vendors. The vendors will bid with their proposed quotations. As the quantity of the camera and its specifications are fixed, it is very easy for the media house to compare the quotes received from different bidders. A Request for Quote includes the specification of the required products or services, payment terms, bid submission deadline and other information needed for a successful bidding. It may also mention the selection criteria the company follows while awarding the contract. Generally, there are four phases of bidding.

• Preparation phase - This is when the Request for Quote is drafted.
• Processing phase - This includes sending out the RFQ and receiving the quotes,
• Awarding phase - This is when a bidder is selected and the offer is awarded.
• Closing phase - This is when the contract is finalized and bidding is closed.

The contract is generally awarded to the bidder who meets the minimum qualifying criteria and proposes the lowest quote. At times, companies send Requests for Quote as an attachment to the Request for Proposals. Requests for Proposal generally include the cost of performing an entire job or function. Request for Quotes are not announced in public, the soliciting company sends it out to their preferred vendors or suppliers. This is sent to only those vendors whom the soliciting company trusts for the product or service. It reduces the time of the selection process and procurement. Request for Quotes streamlines the process of procuring a product or service from outside sources. This strategy is effective when the company knows exactly what they are looking for and who are the best vendors providing that service or product.