Government procurement

Tendering to government

Winning government contracts can bring great rewards for your business. But securing government work means first taking some time to understand government procurement.

Government agencies responsible for tenders are required to run fair and transparent processes to procure their goods and services and are held accountable for their procurement decisions. Government purchasing decisions are driven by value for money so competitive small businesses have the same chance of winning government business as large companies.

The government uses several methods to procure goods and services.

Methods of procurement

Ad-hoc purchasing

For low-value, low risk, one-off, purchases below an agency-agreed fee, government departments can simply approach suppliers they know for a quote. Agencies may use ad-hoc purchases for one-off commissions, usually after sighting 3 quotes.

Direct sourcing

Agencies may make direct approaches to a single provider to invite them to quote for the work. Direct sourcing occurs in very specific circumstances, such as under extreme urgency or if goods and services can only be provided by one supplier (e.g. a commissioned work of art).

Lists of preferred suppliers

Preferred supplier lists are common in most government agencies. Government agencies maintain preferred supplier lists of goods and services, governed by whole-of-government common-use arrangements.

Local, state and federal government agencies periodically review their preferred supplier lists and advertise for, interview and select providers according to their specified needs.

Coordinating government bodies such as the Queensland Public Service Commission or Queensland Government Chief Procurement Office also develop supplier lists to help agencies make reliable and competitive purchasing decisions.

Standing offer arrangements (SOAs)

A standing offer arrangement is usually set up to obtain frequently used products or services or particular commodities during a set period of time without having to undertake any further procurement processes. This saves time and money for both the supplier and government agency.

The Australian Government, for example, establishes panel arrangements for businesses through a selection process and adds suppliers who have satisfied certain supply conditions to their multi-use lists.

Selective tendering

Agencies can use selective tendering processes where there are only a small number of suppliers who are able to provide the goods or service. In this case, the agency can approach these suppliers directly to request quotes or proposals.

Open tendering

Open tenders, which 'invite offers' or put out 'requests for offer', are open to all qualified businesses in the marketplace. If there are a large number of qualified businesses in the marketplace, often an expression of interest or request for information is issued first as a strategy to gauge the level of interest in a particular purchase and as the first stage of a selective tendering process.

Contracts on offer

Government tender processes are thorough and particular. Details of all contracts over $10,000 must be listed on the relevant government tender website. Government agencies that invite offers for goods and services will specify their tender process in detail and often include briefing material or information sessions throughout the tender process. Monitoring government tender lists is a useful way to follow tender processes and purchasing activity, identify your competitors and gather general information about a tender.

Questions about tenders

Government procurement processes prioritise fairness and equity at all times. For example, if a bidder approaches the agency with a question about their tender, agencies will make their answer available to all bidders.

Forward procurement

Advertisements on forward procurement schedules also give suppliers an idea of what tenders may be available in the coming year. For example the Australian Government releases an annual procurement plan that scopes proposed procurements for the coming year (published before 1 July each year).

Forward procurement schedules listed on tender websites may change, so do not start working on a tender until it becomes a request for tender.