Market approach: Goods and services guide

Note: There are a range of market approaches e.g. quotation, tender, registers, expression of interest, etc. An invitation to supply falls into two broad areas:

• Open - Invitation to all potential parties
• Limited - Invitation to nominated/ selected parties.

Procurement Activity Plan

All organisations are required to publish a procurement activity plan. A procurement activity plan outlines an organisation's anticipated procurement activity, over 12 to 24 months. This is a core component of an organisation's procurement strategy. Refer to the VGPB's Governance policy for more information.

Market approach protocols

When approaching the market, consider the following factors:

Minimising the cost for suppliers in preparing a submission

Preparing a submission is a cost to suppliers.

Considerations

• Use quotation processes wherever appropriate. Adopt simplified processes, terms and conditions relevant to the market sector, early market notification and briefing sessions where appropriate.

Using familiar and consistent processes

Familiarity of process will encourage supplier participation in the procurement process, reduce costs for both parties and manage the risk to the organisation.

Considerations

• Maximising use of standard forms, templates, conditions for participation and contract requirements where appropriate.

Local Jobs First Policy (LJF) - Under the Local Jobs First Act 2003

Local Jobs First comprises the Victorian Industry Participation Policy (VIPP) and the Major Projects Skills Guarantee (MPSG). (LJF - MPSG is applicable to construction procurement projects therefore is not included in this guide). LJF ensures that Australia and New Zealand small to medium size enterprises (SMEs) are given a full and fair opportunity to compete for both large and small government contracts, helping to create job opportunities, including apprentices, trainees and cadets, while still achieving value for money.

LJF requires all government departments and agencies to consider competitive SMEs, when awarding contracts valued at:

• $1 million or more in regional Victoria, or
• $3 million or more in metropolitan Melbourne or for state-wide activities

Projects that meet the above thresholds are classified as standard projects. In addition, LJF gives particular attention to Strategic Projects, which are government procurements valued at $50 million or more, or as otherwise agreed as strategic by government.

Maximising participation from small to medium enterprises

Australia and New Zealand small to medium enterprises (SMEs) are an important market sector. They can drive innovation and often offer leading edge technology solutions, high levels of service and value for money outcomes.

Considerations

• Structure procurement requirements in a way that is relevant and familiar to the SME market sector, and where appropriate, notforprofit (NFP) businesses.
• Identify SME relevant components within larger procurement requirements to allow for discrete supply opportunities.
• Make the most of other government initiatives such as State purchase contracts, eTender box, etc. to reduce the cost of preparing a submission.
• Investigate the supply chain arrangements operated by a principal contractor.
• Access the services of the Industry Capability Network (ICN), Business Victoria (BV) and industry associations to identify potential Australia and New Zealand SMEs.
• Applying Local Jobs First where relevant.
• Assess social procurement objectives.

Market research and process integrity

If you engage a supplier to conduct market research in developing project requirements/specifications, or to design a prototype or conduct a trial, ensure that the supplier is not given an unfair advantage over other suppliers should the research propose market testing.

Considerations

• Fully disclose market research information, supplier briefing sessions and define requirements in generic terms to mitigate 'insider knowledge'.

Eliminating bias when engaging with the market

Specifying technical standards, trade/product names or conditions for participation may eliminate suppliers in the market to the detriment of value for money outcomes. An overly cumbersome or costly procurement process can discourage supplier participation.

Considerations

• Adopt processes that do not create unnecessary barriers to participation for a market sector or suppliers relevant to the procurement requirement.
• Ensure that technical specifications are detailed in terms of performance and functional requirements wherever possible rather than referring to model, trade name, patent, copyright, design, model or from a specific producer.
• Use the term 'or equivalent' to enable alternative responses to a specified technical requirement.

Procurement is also governed by Victoria's commitment to comply with various Free Trade Agreements, including a Government Procurement Chapter whereby: A procuring entity may not seek, take account of, impose, or enforce offsets in the qualification and selection of suppliers, goods or services, in the evaluation of tenders or in the award of contracts before or in the course of a covered procurement.

Adopting an approach that encourages innovative responses

Encouraging innovation from the market can generate cost savings, result in the transfer of intellectual property and facilitate better response to the needs of clients of the organisation.

Considerations

• Build on the consideration for innovation embedded in the culture of the organisation.
• Initiate early market engagement and early supplier engagement strategies to provide the market with time to better understand the organisation's needs and formulate an innovative response.

The Supplier Code of Conduct

The Victorian Government (the State) is committed to ethical, sustainable and socially responsible procurement. The State views its suppliers as partners and cares about the way they do business. The Supplier Code of Conduct is applicable to all suppliers, contracts, agreements and purchase orders, for the supply of goods and services, from 1 July 2017, and describes the minimum standards in ethical behaviour that suppliers must aspire to meet when conducting business with or on behalf of the State.

Considerations

• All suppliers who provide goods and services to the State, must acknowledge the Code by signing and returning a commitment letter, issued as part of the invitation to supply documentation. Failure to submit a commitment letter will disqualify the offer from evaluation.
• Suppliers should be encouraged to raise concerns or seek clarification on any elements of the Code during the market approach process.

The Victorian Government Call Centre Code

The Call Centre Code has been developed to assist people to understand the Victoria Government's requirements and expectations in relation to the Victorian call centre industry. It aims to ensure that work is carried out lawfully, fairly, efficiently and safely for the benefits of all people within the call centre industry.

Considerations

• The Call Centre Code is a Victorian Government policy that applies to both government operated call centres and private sector organisations contracted to the Victorian Government to provide call centre services.
• Compliance with the Call Centre Code is a condition of any contract in which a private sector organisation provides call centre services to the Victorian Government. To ensure businesses supplying call centre services to the Victorian Government are complying with the Code, invitees are required to lodge a completed Checklist for Compliance with the Call Centre Code and a signed Declaration of Compliance with their offer. Failure to submit a completed Checklist for Compliance with the Call Centre Code and a signed Declaration of Compliance will disqualify the offer from evaluation.
• Government buyers must include the model contract clause in procurement contracts with suppliers providing call centre services to this will create a binding contractual obligation on the supplier to comply with the Call Centre Code.

Requiring compliance with International and Australian Accreditation Standards where applicable

Accreditation standards detail the performance standards to be performed or delivered by parties in particular market sectors. Having accreditation gives a buyer a degree of assurance that the supplier is able to provide a level or range of service of relevance to the procurement activity.

Considerations

• Where relevant to the procurement activity, inform the market that suppliers will need to comply with the appropriate accreditation standards in order to participate in the procurement process.

Note: an offer to supply potentially establishes a legal relationship between the Organisations and the supplier(s). This is known as a 'process contract'.

Market notification

The process for notifying the market about supply opportunities needs to balance the nature of the procurement requirement and the relevant market sector dynamics with the costs and benefits to buyer and supplier.

A limited invitation to supply involves a direct approach to the market. Such an approach should not be used:

• to avoid competition; or
• other than in accordance with applicable International Agreements

A limited invitation to supply may be relevant where:

• one or more of the Special Circumstances apply, as detailed in 'Government procurement under International Agreements - procurement guide';
• the procurement requirement can only be provided by an extremely limited field of suppliers;
• the procurement requirement is related to accessing specific intellectual property, specific technical requirements or maintaining a common operating platform;
• there is an opportunity to build on market based solutions and to develop strategic partnership arrangements; and
• there is a requirement to address security requirements, protect patents, copyrights, propriety information or intellectual property.

When carrying out a limited invitation to supply involving a direct approach to more than one selected/nominated suppliers, you need to determine the appropriate number of suppliers to notify to generate value for both buyer and supplier.

Considerations

• Assess whether any International Agreements apply to the procurement and, if so, whether any special circumstances permit a limited invitation to supply under each applicable International Agreement.
• Obtain sufficient submissions to assess the degree to which the engagement can satisfy a value for money outcome.
• Ensure the number of submissions reflects the relevant market sector's ability to supply.
• Obtain sufficient participation to establish a competitive environment and to compare submissions.
• Adopt a strategic negotiation framework to drive innovation and value for money outcomes.

Possible considerations in selecting the optimal path to market

The following table indicates the possible paths to market based on the complexity of the procurement.

Potential path to market options for each complexity quadrants