Public vs. Private RFPs: What's the Difference?

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Bidding on government and private sector RFPs can be very different experiences for you and your business. Generally speaking, this is largely due to the varying objectives and regulatory requirements of public organizations versus those of private companies. While profit is usually the sole motivation of a private business, public entities have myriad factors to consider.  

1. Transparency

Since private organizations exist in the competitive business world, their purchasing activities are strictly confidential in most cases. Public entities, on the other hand, have to be as open with their practices as possible, in order to reassure the public that their tax dollars are being spent appropriately.

Of course, all of this freedom in the private sector comes at the expense of transparency (and, sometimes, fairness). While many private companies adopt “best practices” in order to be seen as honest and ethical, they don’t have to share certain information such as evaluation criteria. Since their selection isn’t subject to as much regulation and scrutiny, they are free to choose bidders based on their own criteria, and aren’t forced to publish details regarding winning bids.

2. Laws and Regulations

For starters, the public RFP process is much more regulated and formalized than that of 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, certain investment disclosures and so on. These items aren’t necessarily required in the less regulated world of private bids, therefore private RFPs are often much shorter.

Many public organizations may also have requirements of their own in addition to the federal, state, and city regulations that are incorporated into their bid requirements. For example, the Texas Department of Transportation requires that contractors re-qualify 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 are usually required to obtain certain registrations and licenses. 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 aren’t required for private sector bids as companies manage their own financial due diligence and risk management functions.

3. Public Preferences

Government entities are frequently required to give preferential treatment to certain businesses over others and it’s standard in the public sector to give an advantage to small and minority-owned businesses. For example, the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program requires t hat state and local transportation agencies hire a certain number of subcontractors who are socially or economically disadvantaged, 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 is the best. Choosing the larger vendor also mitigates the risk that a vendor will default or go bankrupt during the term of the contract.

4. 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 that of private bids. Sometimes, government bids will have an associated decision date, and it is not unheard of for a decision date to come and go with no announcement made for weeks afterward. In the private space, typically decision dates are hardline as businesses are seeking to implement a solution as quickly as possible.

In regard to deadlines for the applicant though, the opposite rules apply.  While you will virtually never receive an extension for a government deadline if you are late, private RFPs are more likely to have flexibility. Don’t count on it though. It’s always safe to assume that a late RFP is a disqualified RFP.

Below is a handy chart to help you remember the main differences between public and private bids:

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You Don’t Have to Go It Alone!

The varied nature of public and private bids can seem overwhelming, even for experienced businesses. This is why many seek the expertise of outside consulting services. Whether public or private, The Bid Lab can guide your firm through everything from finding the most strategic RFP opportunity to submitting your winning proposal. Click here to get in contact with us.