Ask Spend Matters: Should You be Asking for Prices in the Supplier Prequalification Process?

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Editor’s note: This is part of the Ask Spend Matters series, where readers send in their burning questions about procurement and supply chain.

A North America-based reader from a professional services company recently wrote in with a question about asking for prices in the supplier prequalification process.

She noted that procurement organizations in the public sector tend to ask for prices in the RFI process and then again in the formal RFQ process, whereas in the private sector they typically ask for prices in the RFI process only when they need to explore the market, saving price requests for the RFQ.

Why does the public sector need an RFI with prices and then an RFQ, likely with the same prices? It seems inefficient to this reader, who wonders if there are some advantages to this approach that she is missing.

We flipped this question to Xavier Olivera, lead P2P analyst at Spend Matters and the editor of Spend Matters Mexico y América Latina.

“It all depends on the government acquisition process,” Olivera said, explaining that the public sector may request prices during the supplier prequalification process to make sure the prices are a good fit before moving on to the next step.

“In this case, my guess is that they already have a budget for the project,” he said. “If they are asking for the price in the RFI, it is to see if the solution is within their budget. It is probably just a ballpark [figure].”

“It is like going to a job interview, where one of the first things they ask is how much you want [to be paid],” Olivera continued. “This way they can see if you are in their budget. If not, they will not continue the interview. [If you are], then they will continue and at the end give you a proposal, which you can negotiate.”

Hence, whether to ask for prices in the RFI process will really depend on whether this will save you time and energy in the long run. How many RFIs do you expect or want to receive? Do you have a strict budget? Is it in your interest to make it as easy as possible for suppliers to participate in the RFI? All of these questions should factor into your decision.

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