What to consider
- You must be authorised to approach the market.
- You should consider 7 key factors.
- Your overriding consideration should be achieving value for money.
- You must also follow relevant laws and NSW Government policy.
- The goods and services you are procuring may affect how you approach the market.
To be authorised to approach the market, you need to have:
- the appropriate level of accreditation
- approval from your financial delegate
- an approved and adequate budget
- an approved strategy for approaching the market, and
- arrangements in place to manage all stages of the process and outcome.
Estimating the contract value
You will need to know the total value of the contract to gain the appropriate approvals and decide on the best way to approach the market. You should consider the total value of the goods or services you’re procuring over the life of the contract, including any extensions or other sources of remuneration you’ll provide to the supplier such as fees, interest or commissions.
The contract value will help you determine if you are accredited to conduct the procurement, and whether your agency head or another delegate can approve the procurement and sign the contract.
If your agency is covered by PBD-2019-05 Enforceable procurement provisions (EPP Direction), and the procurement isn’t exempt under Schedule 2, you must make a reasonable attempt to estimate the total value of your procurement before approaching the market. If you don’t make a reasonable attempt or you can’t estimate the total value, you must apply the EPP Direction when approaching the market.
You must include estimates of the following when estimating the maximum value of a proposed procurement contract:
- the value of the goods and services to be procured
- the value of any options, extensions, renewals or other mechanisms that may be executed during the life of the contract
- all remuneration payable by the agency including any:
- all revenue streams that may be provided for in the proposed contract, such as when a contract to construct government-owned infrastructure also establishes a right for the supplier to control or operate the infrastructure and demand payment for its use.
If your procurement will include multiple contracts, you must include the estimated value of all the proposed contracts. For example, the estimate should include the value of all contracts that may be entered into under a whole-of-government contract or a procurement panel, even where individual procurement contracts are likely to be below the relevant threshold values.
If you estimate your procurement is over:
- $657,000 for goods and services contracts
- $9.2 million for construction contracts
you must apply the EPP Direction.
7 key factors to consider
Before you approach the market, you should consider 7 key factors.
1. Value for money
You must achieve value for money every time you procure goods or services. Value for money means the total benefit a good or a service provides over the period it will be used minus the total cost of procuring and using the good or service. It doesn’t mean necessarily getting the lowest price or the highest quality.
You should consider how you will assess value for money before approaching the market.
Read more about value for money.
2. Fair and open competition
You must be fair when procuring goods or services. Open competition is fair to suppliers. It also helps you identify the supplier who offers the best value for money.
The way you approach the market can encourage long- and short-term competition among suppliers or stifle it. In some cases, the decisions you make can also make or break suppliers. This can impact on the cost and quality of the solutions you ultimately receive, and market dynamics in the longer term.
SMEs, regional and Aboriginal businesses
You should consider ways to encourage small and medium enterprises (SMEs), regional and Aboriginal businesses to participate in your procurement. The government has a range of initiatives to support these businesses and you need to factor these into your planning.
Read more about fair and open competition.
Read more about supporting SMEs, regional and Aboriginal businesses.
3. Benefits and risks
Different methods of approaching the market carry different benefits and risks. You should always take these into account.
Read more about benefits and risks in ways to approach the market.
4. Transparent and ethical dealing
As a government agency, you’re obliged to always act transparently and ethically. You must operate within a framework of probity and fairness. This includes disclosing any real or perceived conflicts of interest so that no one can ever legitimately accuse you of bias.
Read more about probity and fairness.
Every agency is responsible for its own procurement. Always consider your ability to manage your approach to market and the subsequent procurement process.
Read more about managing the procurement process.
6. Government policies and legislation
You must approach the market in a way that’s consistent with both the law and NSW Government policy.
Read more about policies and guidance.
7. The impact on other agencies
Your approach to market can impact on other agencies’ procurement processes too. This is especially true if it leads to a whole-of-government arrangement.
Read more about whole-of-government arrangements.
Where to approach the market
There are 3 whole-of-government systems you can use to source suppliers when approaching the market. Your agency may also have its own independent system for sourcing suppliers.
This is where you advertise tenders and where suppliers submit their responses.
You also use eTendering to list any upcoming or closed business opportunities, and to list awarded contracts valued over $150,000.
Use eQuote to request quotes from suppliers registered on prequalification schemes or procurement lists.
This portal has been set up to connect the buyers and suppliers of digital products and services.
Visit the Supplier Hub.
- Approach the market: Read an overview of what’s involved in approaching the market and what you must do.
- Ways to approach the market: Discover the different methods for approaching the market, including traditional and non-traditional approaches, as well as complex market engagements.
- Traditional ways to approach the market: Read about the traditional ways to approach the market, such as tenders, requests for Proposal (RFPs) and requests for quote (RFQs).
- Non-traditional and complex market arrangements: Discover some of the non-traditional and complex market arrangements, including managed services contracts (MSCs) and strategic commissioning.