Request for Quotation (RFQ)

Definition

A Request for Quotation (RFQ) is a formal procurement document issued by a buying organisation to one or more potential suppliers, inviting them to submit their pricing, terms, and conditions for a clearly defined set of goods or services. The RFQ specifies the items required, quantities, quality standards, delivery timelines, and evaluation criteria, enabling the buyer to compare vendor responses on a like-for-like basis and select the most suitable supplier.

In Indian business practice, the RFQ process is particularly important for ensuring transparency, competitive pricing, and regulatory compliance. Government and public sector procurement in India is governed by the General Financial Rules (GFR) 2017, which mandate competitive bidding through platforms like the Government e-Marketplace (GeM). Private sector companies adopt similar practices for governance and cost control. An effective RFQ process also helps verify vendor compliance (GST registration status, PAN details for TDS purposes, and MSME classification) before awarding business.

The RFQ differs from a Request for Proposal (RFP) in scope and complexity. RFQs are typically used when the buyer knows exactly what they need and is primarily comparing prices and delivery terms. RFPs are used for complex requirements where vendors propose different approaches or solutions. For routine procurement of standardised goods and services, the RFQ is the more efficient instrument.

Key Points

• RFQs provide a structured, transparent method for obtaining competitive pricing from multiple vendors
• The document specifies item descriptions, quantities, quality standards, delivery requirements, and evaluation criteria
• Indian government procurement requires competitive bidding through platforms like GeM under GFR 2017
• RFQ responses should be evaluated on total cost of ownership (not just unit price) including GST, freight, and payment terms
• Vendor compliance verification (GSTIN, PAN, MSME status) should be part of the RFQ evaluation process
• Digital RFQ platforms enable side-by-side comparison of vendor responses and automated scoring
• RFQs differ from RFPs: RFQs seek pricing for defined requirements, while RFPs invite solution proposals for complex needs