Why silence burns more than a clean no
Buyers remember who wasted their evaluation time. They also remember who vanished. A short decline tells them you read the pack, you made a call, and you can be trusted to do it again. That is the relationship. A zombie submission you did not want is not a courtesy. It is a cost you handed to them.
On an invited private RFP, the invitation was the relationship. Answering it with nothing is how invitations stop. On an open public RFT, the instructions usually say whether a non-participation notice is required. Follow them. Then stop talking.
When you must respond, and when you can stay quiet
Must: the RFT asks for a non-participation notice; you attended an industry briefing under a process that expects a reply; a private buyer invited you by name. Should: any buyer you want to see next year. Can stay quiet: a truly open portal listing you never touched, with no briefing and no relationship. Even then, if BD has been in the inbox, write.
Panel refresh is a special case; see bid/no-bid for panels. Some frameworks treat a no-response as a drop. Read the clause before you decide that silence is cheaper.
The letter
Thank them. Decline. Give one true reason at a height they can accept: capacity in this window, fit to the work you are concentrating on, inability to meet a mandatory. Leave a door for work that does fit. Do not offer to help them rewrite the specification. Do not name the competitor you think will win. Do not apologise for having a strategy.