1. SOURCING AND ACQUISITION

Strategic sourcing can be defined as the process of identifying sources that could provide needed products or services for the acquiring organization.

The objective of military acquisition is to acquire products that satisfy specified needs and provide measurable improvement to mission capability at a fair and reasonable price. It can be defined as the conceptualization, initiation, design, development, test, contracting, production, deployment, Logistics Support (LS), modification, and disposal of weapons and other systems, supplies, or services (including construction) to satisfy the military need, intended for use in or in support of military missions.

Modern military acquisition is a complex blend of science, management, and engineering disciplines within the context of a nation’s law and regulation framework to produce military material and technology.

2. MILITARY PROCUREMENT

Military procurement is one component of the above mentioned concept of sourcing and acquisition. It is more tactical in nature (the process of physically buying a product or service).

Nowadays it is defined as an organizational function that includes specifications development, value analysis, supplier market research, negotiation, buying activities, contract administration, inventory control, traffic, receiving and stores.

3. COMMONLY USED STEPS IN PROCUREMENT PROCESS

a. Request For Qualification (RFQ/PQQ).

A Request for Qualifications (RFQ) also known as Pre-Qualification Questionnaire (PQQ) is a document often distributed before initiation of the RFP process. It is used to gather vendor information from multiple companies to generate a pool of prospects. This eases the RFP review process by pre-emptively short-listing candidates which meet the desired qualifications.

Benefits of including a Request for Qualifications step:

For the procurer, an RFQ provides a pre-screening step, so at the request for proposal phase there are fewer proposals to evaluate. The Request for Qualifications thus becomes a means by which the purchasing agency can add vendors to their select sellers list, i.e. list of vendors eligible to bid.
For the respondent, they do not spend the time and effort to write a full proposal only to find out they were not qualified as a firm.

b. Request for Information (RFI)

A Request for Information (RFI) is a proposal requested from a potential seller or a service provider to determine what products and services are potentially available in the marketplace to meet a buyer’s needs and to know the capability of a seller in terms of offerings and strengths of the seller. RFIs are commonly used on major procurements, where a requirement could potentially be met through several alternate means.

An RFI is primarily used to gather information to help make a decision on what steps to take next. RFI’s are therefore seldom the final stage and are instead often used in combination with the following: request for proposal (RFP), request for tender (RFT), and request for quotation (RFQ). In addition to gathering basic information, an RFI is often used as a solicitation sent to a broad base of potential suppliers for the purpose of conditioning suppliers’ minds, developing strategy, building a database, and preparing for an RFP, RFT, or RFQ.

c. Request For Proposal (RFP)

A request for proposal (RFP) is a document that solicits proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service or valuable asset, to potential suppliers to submit business proposals. In principle, an RFP:

• Informs suppliers that an organization is looking to procure and encourages them to make their best effort.
• Requires the company to specify what it proposes to purchase. If the requirements analysis has been prepared properly, it can be incorporated quite easily into the Request document.
• Alerts suppliers that the selection process is competitive.
• Allows for wide distribution and response.
• Ensures that suppliers respond factually to the identified requirements.
• Is generally expected to follow a structured evaluation and selection procedure, so that an organization can demonstrate impartiality – a crucial factor in public sector procurements.

d. Request For Quotation (RFQ)

A request for quotation (RFQ) is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. It is used when discussions with bidders are not required (mainly when the specifications of a product or service are already known) and when price is the main or only factor in selecting the successful bidder.

An RFQ may also be used prior to issuing a full-blown RFP to determine general price ranges. In this scenario, products, services or suppliers may be selected from the RFQ results to bring in to further research in order to write a more fully fleshed out RFP.

A request for quotation typically involves more than the price per item. Information like payment terms, quality level per item or contract length may be requested during the bidding process.

To receive correct quotes, RFQs often include the specifications of the items/services to make sure all the suppliers are bidding on the same item/service. Logically, the more detailed the specifications, the more accurate the quote will be and comparable to the other suppliers. Another reason for being detailed in sending out an RFQ is that the specifications could be used as legal binding documentation for the suppliers.

An RFQ allows different contractors to provide a quotation, among which the best will be selected. It also makes the potential for competitive bidding a lot higher, since the suppliers could be quite certain that they are not the only ones bidding for the products.

e. Request For Tenders (RFT)

A request for tenders (RFT) is a formal, structured invitation to suppliers to submit a bid to supply products or services.

The closest equivalent to an RFT is a request for proposal (RFP), which typically has a less rigid structure.

An RFT is usually an open invitation for suppliers to respond to a defined need as opposed to a request being sent to selected potential suppliers. The RFT often requests information following on from other information gathered previously from responses to a Request for information (RFI). This will usually not only cover product and service requirements, but will also ask for information about the suitability of the business.

An RFT is usually expected to conform to some legally standardized structure designed to ensure impartiality. And the tender bid winner is entitled to take responsibility of the contract business supply documentations formalities and settle any tender bid engagement charges for official recording.