Want Truthful RFPs? Try Having Vendors Fact-Check Competing Bids

In today's Internet-connected world, why do retailers still tolerate RFPs packed with lies? Why not use peer review to squeeze some truth out of them?

For as long as anyone in IT can remember, a Request For Proposal (RFP) was really a Request For Vendors To Lie To Me, Telling Me Their Products Can Do Lots Of Stuff They Can't (RFVTLTMTMTPCDLOSTC). Somehow, the RFP acronym is the one that caught on. One key reason vendors have gotten away with this for so long is that they know the system well enough to game it. Vendors know darn well that few IT staffs will bother to do true due diligence on product claims and even fewer will bother to drag the RFP out months later and hold the vendor accountable for the lies.

After the RFPs are evaluated through simple "count the number of Yes answers" and other sophisticated techniques, a select few will get the full questioning and even fewer will get to do demos and participate in a trial. As long as no one holds vendors to the answers their teams originally gave (and who even bothers to check?), the incentive to be truthful in an RFP is nil. The fact that the competing vendors play by the same dishonest rules doesn't help, either.

Why not try something new? Tell the next round of vendors that you will take their RFPs and, after pricing and anything else that is truly secret is removed, publish them on your site. Making it fully public is the boldest move, but you could do it partway and place the sanitized RFPs in a password-protected part of your extranet. All of the vendors submitting RFPs would have access, and they could review the submissions of their competitors.

If there are any lies or distortions, they will immediately be brought to your staff's attention. Yes, some vendors that lie for a living (I won't mention any names here, so y'all at SAP and Oracle can relax) will tell you that their rivals' claims are false even if they're true. But that's where your team will have to do a little due diligence. Simply cc both players in an E-mail and watch the back and forth. It won't take long to determine the truth, and the vendor that had the trackballs to lie about a rival lying will get banned from future bids.

Although this is very different behavior for a retailer, it is a good low-cost way to pressure vendors to be far more truthful in their bids. A little transparency can be a wonderful thing.Another reason behind these untruthful RFPs is the popularity of standardized spreadsheets used by many chains. The Association for Retail Technology Standards (ARTS) of the National Retail Federation (NRF), for example, has a popular Excel RFP template that it offers to members. Retailers certainly customize them—adding many specific requirements—but a healthy percentage of the original document is often used.

These templates are helpful. But the more formulated they are, the easier it is to evaluate offerings by a literal checklist approach. One nice trick to use when creating your RFPs is to make sure you have a question that cannot be answered truthfully with a "yes"—as in, "Without knowing any of our internal operational details, can you provide an precise roadmap for completion?" That way, you can quickly sniff out vendors that are answering questions without reading—or at least without thinking about—them.

This idea came out of a conversation I had the other day with Gene Cornell, president of a POS software company called Cornell-Mayo Associates. Cornell was complaining about often getting outbid, and he recently had an unusual occasion to learn of the specific lies a rival told during a retail bid, he said.

"That the largest companies in our business con retailers on a regular basis shows that caveat emptor is still the rule in choosing software. There is no penalty for dishonesty, and dishonest responses are rewarded over honest ones," he said. "I don't believe that blindly accepting the answer most favorable to the vendor is the right way to make a critical decision."

Cornell clearly has a strong motivation. But the fact is, the type of open approach we're describing would actually make some of the vendors act as your fact-checkers. This is hardly a new concept; law firms have, for decades, pitted associates against each other, having them check each other's work. It might not be the best way to engender good colleague interactions, but it wonderfully accomplishes two objectives: catching errors and ultimately making fewer errors happen (as associates know that their colleagues will be only too happy to discover them).

For most large chains, the RFP process has fundamentally gone unchanged for a huge number of years. Don't you think it deserves a nice refresh?