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Focus on Sourcing

by Staff Writers •
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The many terms used in the procurement field can be confusing – sole, open, select, direct, restricted. What do they all mean?

Stripped down to basics, there are three ways an agency can choose to undertake a particular procurement:

  • Approach the open market with an invitation to respond to the requirement – this is open sourcing,
  • Approach a limited group of potential suppliers to respond to the requirement – restricted or select sourcing, and
  • Purchase directly from a particular supplier who meets the requirement – direct or sole sourcing.

The Commonwealth Procurement Guidelines (CPGs) define open sourcing as including requests for tender, requests for expression of interest and requests for application for inclusion on a multi-use list which are published on AusTender. An open tender process involves publishing a request for tender and accepting all submissions received before the deadline for submissions from any potential suppliers who satisfy the conditions for participation. These conditions can include membership of a multiuse list which has itself been subject to open tender or membership, such as the Endorsed Supplier Arrangement (ESA).

Restricted or select sourcing is generally undertaken after an initial open approach to the market, such as expression of interest or multiuse list. Where a multiuse list is used, agencies may approach some or all of the potential suppliers “provided that the largest number of potential suppliers is selected that is consistent with an efficient procurement process”. Restricted sourcing approaches call for a balance between ensuring competition and limiting the scope and costs of the procurement process to serious contenders.

Direct or sole sourcing, in which an agency invites one or more suppliers of its choice to respond, can only be undertaken under defined conditions. These conditions include

  • failure of the market to meet the requirements of an open tender,
  • conditions of unforeseen and extreme urgency , and
  • where the goods or services can only be supplied by a particular supplier and no reasonable alternative is available. This includes circumstances where there is continuing relationship for repairs, parts, services etc “where a change of supplier would compel the agency to procure property or services that do not meet requirements of compatibility with existing equipment or services”.

Agencies publish award of contracts on AusTender. From April 2004, it became mandatory to indicate, for each contract they awarded, whether the contact was the result of an open, select or sole source procurement method.

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