9. Procurement method

9.1       Australian Government procurement is conducted by one of three methods open tender, prequalified tender or limited tender. These methods are detailed in this section.

Requirement to estimate value of procurement

9.2        The expected value of a procurement must be estimated before a decision on the procurement method is made. The expected value is the maximum value (including GST) of the proposed contract, including options, extensions, renewals or other mechanisms that may be executed over the life of the contract.

9.3        The maximum value of the goods and services being procured must include:

a. all forms of remuneration, including any premiums, fees, commissions, interest, allowances and other revenue streams that may be provided for in the proposed contract;

b. the value of the goods and services being procured, including the value of any options in the proposed contract; and

c. any taxes or charges.

9.4        When a procurement is to be conducted in multiple parts with contracts awarded either at the same time or over a period of time, with one or more suppliers, the expected value of the goods and services being procured must include the maximum value of all of the contracts.

9.5        A procurement must not be divided into separate parts solely for the purpose of avoiding a relevant procurement threshold.

9.6        When the maximum value of a procurement over its entire duration cannot be estimated the procurement must be treated as being valued above the relevant procurement threshold.

Procurement thresholds

9.7        When the expected value of a procurement is at or above the relevant procurement threshold and an exemption in Appendix A is not utilised, the rules in Division 2 must also be followed. The procurement thresholds (including GST) are:

a. for non-corporate Commonwealth entities, other than for procurements of construction services, the procurement threshold is $80,000;

b. for prescribed corporate Commonwealth entities, other than for procurements of construction services, the procurement threshold is $400,000; or

c. for procurements of construction services by relevant entities, the procurement threshold is $7.5 million.

Three procurement methods

Method 1Open tender

9.8        Open tender involves publishing an open approach to market and inviting submissions.

Method 2 – Prequalified tender

9.9        Prequalified tender involves publishing an approach to market inviting submissions from all potential suppliers on:

a. a shortlist of potential suppliers that responded to an initial open approach to market on AusTender;

b. a list of potential suppliers selected from a multi-use list established through an open approach to market; or

c. a list of all potential suppliers that have been granted a specific licence or comply with a legal requirement, when the licence or compliance with the legal requirement is essential to the conduct of the procurement.

Method 3 – Limited tender

9.10     Limited tender involves a relevant entity approaching one or more potential suppliers to make submissions, when the process does not meet the rules for open tender or prequalified tender.

9.11     For procurements at or above the relevant procurement threshold, limited tender can only be conducted in accordance with paragraph 10.3, or when a procurement is exempt as detailed in Appendix A.

Procurement from existing arrangements

Procurements from standing offers

9.12     Procurements from an existing standing offer must comply with Division 1.

9.13     Officials should report the original procurement method used to establish the standing offer when they report procurements from standing offers.

Back to top

Last updated: 09 July 2014