Public RFPs vs. Private RFPs: What’s the Difference?
Bidding on government and private sector Requests for Proposal (RFPs) can be a different experience for you and your business. Generally, this is due to public organizations’ varying objectives and regulatory requirements versus private companies. However, there can be many factors to consider regarding public RFPs vs private RFPs.
Transparency of Public RFPs vs. Private RFPs
Since private organizations exist in the competitive business world, their purchasing activities are usually strictly confidential. However, public entities must be as open with their practices as possible to ensure transparency with tax dollar funding.
Of course, this freedom in the private sector comes at the expense of transparency (and sometimes fairness). While many private companies adopt ethical “best practices,” they don’t have to share information like evaluation criteria. Additionally, since their selection isn’t subject to as much regulation and scrutiny, they’re free to choose based on their standards. They aren’t forced to publish details regarding winning bids. This could mean you do not receive feedback on why your bid wasn’t accepted. You might never know you lost a request because the private entity already had a pre-existing relationship with another vendor.
Laws and Regulations
For starters, the public RFP process is much more regulated and formalized than the private sector. Public RFPs usually have standardized formats and require certain legal documents and disclosures, such as political contribution disclosure forms, non-collusion affidavits, and certain investment disclosures. These items aren’t necessarily mandatory in the less-regulated world of private bids. Therefore, private RFPs are often much shorter.
Many public organizations require their own criteria in addition to the federal, state and city regulations incorporated into their bid requirements. For example, the Texas Department of Transportation requires that contractors requalify to bid on projects every single year. This involves completing an extensive questionnaire outlining the business’s equipment assets, vendor relationships, experience and financial capability.
In addition, those seeking to do business with the government usually must obtain certain registrations and licenses. Keeping up to date with government processes is also another factor to consider in the public RFPs vs. private RFPs debate. For example, prior to April 4, 2022, a bidder will almost always need to get a Data Universal Numbering System (DUNS) number and register with the System for Award Management (SAM). These are not requirements for private sector bids, as companies manage their own financial due diligence and risk management functions. Today, third-party systems like DUNS are no longer a de facto way to uniquely identify entities.
Government entities are frequently required to give preferential treatment to certain businesses over others. This includes advantages for small and minority-owned businesses. For example, the US Department of Transportation’s Disadvantaged Business Enterprise (DBE) program requires that state and local transportation agencies hire a certain number of subcontractors who are socially or economically disadvantaged. This is in order to provide a level playing field for bidders.
On the other hand, private sector firms generally prefer working with larger firms that are financially stable and with the largest market shares of their respective markets. The thinking goes that the leader has the largest market share because it’s the best. Choosing the larger vendor also mitigates the risk that a vendor will default or go bankrupt during the contract term.
Timing and Deadlines
Due to the government’s size and bureaucracy, the public RFP process can often be subject to delays. In addition to the regulatory hoops outlined above, the life cycles of public bids are typically much longer than those of private bids. Sometimes, government bids will have an associated decision date, and it’s not unheard of for a decision date to come and go with no announcement made for weeks afterward. In the private space, decision dates are typically hardline as businesses seek to implement a solution as quickly as possible.
With deadlines for the applicant, though, the opposite rules apply. While you’ll virtually never receive an extension for a government deadline if you’re late, private RFPs will likely have flexibility. Don’t count on it, though. It’s always safe to assume that a late RFP is a disqualified RFP.
Public RFPs vs Private RFPs: You Don’t Have to Go It Alone
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The varied nature of public RFPs vs. private RFPs can seem overwhelming, even for professional businesses. This is why many seek the expertise of outside consulting services. The Bid Lab can guide your firm through it all, whether public or private. Get started by calling 1-844-4BIDLAB or emailing firstname.lastname@example.org.