Choose a way to approach the market
- There are many ways to approach the market, including traditional and non-traditional methods, as well as complex market engagements.
- What works best will depend on your own agency rules as well as the circumstances and goals for your procurement.
- Most agencies opt for a traditional method, such as a tender or request for quote.
- We encourage agencies to also consider non-traditional and other methods.
- This can lead to greater innovation but also carries greater risk, so you must take care to justify your approach and use correct processes.
Choose a method for approaching the market
If you’re procuring goods or services not covered by an existing arrangement, you should always choose an approach based on:
- the contract value
- our agency's level of accreditation
- your agency's procurement policies and delegations manual
- any relevant supplier exemptions and procurement preferences
- whether the procurement is covered by PBD-2019-05 Enforceable Procurement Provisions
- any relevant directions issued by the NSW Procurement Board.
Beyond these factors, you should always keep in mind:
- any special requirements you have for the work, products or services
- the work capabilities and commitments of suppliers, and
- your ability to monitor and assess the supplier’s performance.
No single approach works best
There’s no one-size-fits-all way of approaching the market. Different methods tend to work best in different scenarios. What’s best usually depends on the value, complexity and timing of the procurement.
It can also depend on the nature of the market for products or services, as well as on your procurement goals.
For instance, you may be best procuring goods and services you buy frequently through a selective tendering process using a prequalification scheme. This might involve seeking a request for quote (RFQ) from prequalified providers.
When it’s unclear who can supply a good or service or whether a market for it even exists, you’re likely to get a better result by starting off with an expression of interest (EOI). This will help you first determine whether any suppliers can meet your requirements.
Three categories of approaches to market
Generally, approaches to market fall into three categories: traditional, non-traditional approaches and complex market arrangements.
We encourage you to always consider non-traditional and complex engagement methods as well as traditional ones. However, as these carry greater risk, if you’re not using a traditional method you must always do two things.
- Justify your approach in your procurement strategy. For direct negotiations and sole-sourcing arrangements, you must show why a competitive process isn’t necessary. You should base this on:
- comprehensive risk assessment, and
- market analysis.
- Follow your internal delegations process. Usually, the means you should get your Chief Procurement Officer’s approval. Sometimes, you may also need to get a more senior executive’s approval, especially for high-value or high-risk engagements.
Traditional approaches to market
These include methods such as requests for tender (RFTs), requests for quote (RFQs) and expressions of interest (EOIs). Many agencies have traditionally used these as the first port-of-call, except in special or unusual circumstances.
Non-traditional and complex market engagements
Non-traditional and complex market approaches include strategic commissioning and managed services contracts (MSCs). You’re encouraged to explore and use these methods when it will lead to a better result or greater innovation.