Government buyers can approach the market in different ways, and their chosen procurement process is informed by various factors.
Before approaching the market with a procurement opportunity, Government buyers will consider various elements of the market environment to decide what market approach is best suited to their requirements.
Some key factors they will likely identify include:
- Is the good or service in short supply or abundance?
- What are the parameters of the good or service?
- Who is able to offer the good or service and for how long?
- What is the current market price of the good or service?
Quick Tip - Understanding government’s market approach can help you make more informed decisions about your likelihood of success in winning a bid, allowing you to assess your value proposition within the competitive environment.
Market Approaches
There are three main approaches that the government will use when distributing quotations and tenders depending on their value and complexity.
Open Market Approach
Open market opportunities are public offers available to all suppliers in the market. This approach creates competition and may be used in a supply market that is subject to continuous change, with a high level of interest.
Single Market Approach
A single market opportunity is when only one select supplier is approached for a response. This approach may be used when there is a limited number of suppliers, a prequalified list of suppliers or shortlisted group of suppliers.
Limited Market Approach
Limited market opportunities are when a few select suppliers are approached for a response. This approach may be used when there is a limited number of suppliers in the market, there is a group of shortlisted suppliers, or in instances where a select number of suppliers are licenced to meet certain standards.’
Approach Type & Format
As well as defining the market approach, the type and the format of the approach used also needs to be determined. This is considered based on the value and complexity of the procurement.
Expression of Interest (EOI): Used when there is limited understanding of the market or a lack of clarity about requirements.
Invitation to Supply: Open and publicly advertised tender that allows for a variety of responses.
Direct Negotiation: A direct supplier(s) approach where negotiating occurs without any other market interaction.
Competitive Advantage: This is normally used with large scale or complex procurements and involves engaging directly with suppliers in the form of detailed discussions.
