Responding to RFPs: When Not to Bid

The RFP evaluation process requires a considerable amount of time and resources. Ideally, it would be best to direct those efforts towards RFPs that are a good fit for your business. The most straightforward way to determine whether a project is a no-go is by conducting a bid/no-bid analysis.

Here are some factors to consider when deciding whether bidding on a proposal would be beneficial to your business:

If a project isn’t profitable, then it would be in your business’s best interest not to bid on the project. Meticulously calculate labor and equipment costs so you can identify whether the potential revenue would be sufficient to cover the job expenses. Be sure to include factors like taxes, worker’s compensation, and equipment expenses.

While taking on more projects could bring more revenue, accepting more than you can handle may backfire on your business. Review your current and upcoming projects to ensure that you have the workforce and resources needed to commit to a new project. If you don’t, that’s a sure sign you should let go of the project. You wouldn’t want to rush and offer half-baked services to a client.

Assess whether the project you are looking to bid on aligns with your company’s long-term strategy. Do you want to stay local, or are you planning on expanding globally? Maybe you want to target a different market or expand your business in a different location? Whatever it is, ensure that you are bidding on projects that align with those goals.

Take into account other competitors.  For instance, do they already have an existing relationship with the client? If they do, this may put them ahead of the competition. Consider their strengths and weaknesses and compare them with yours. It’s crucial to self-evaluate your team and determine whether your services are superior to the competition.

Once you’ve decided not to place a bid on a project, it’s crucial to inform the client through a no-bid response immediately. Through an official letter, you can state that while you are not interested in bidding for a certain project for valid reasons, you are still interested in doing business with them in the future, helping you remain on their prospective bidder list.

When drafting a letter, follow these guidelines:

• Be brief and concise when stating your reasons for a no-bid.
• Keep a positive attitude when providing insights about the decision not to bid.
• Don’t forget to indicate your contact information for future projects.
• If you have established a good relationship with the client, it would be good to follow up with a call.

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