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Selling to the Australian Government: A guide for business

Published October 2006

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Table of Contents

• Introduction
• Step One - Know Your Customer
• Step Two - Understand the Rules
• Step Three - Understand the Process
• Step Four - Watch for Opportunities
• Step Five - Build Relationships
• Step Six - Compete to Win
• Easy Reference Summary
• Glossary
• Useful Links

Introduction

The Australian Government is a large potential market for businesses of all sizes.

From advertising and cleaning services to engineering and office equipment, and from training and project management to research and recruitment - government departments and agencies purchase a huge variety of goods and services from the private sector.

As a supplier wanting to sell to the government, you need to know how this purchasing is done, who to contact and, importantly, how to find the opportunities and submit a competitive tender.

If you are interested in doing business with the Australian Government, then this guide is your starting point. It answers basic questions on the essentials, such as:

• How does the government market work?
• What are the rules when the government buys from the private sector?
• Where do you find business opportunities?
• How do you win government business?

The Department of Finance and Administration has developed this guide to help you identify opportunities and compete for government business.

In addition to the advice provided here, there are many other sources of information and assistance for suppliers wishing to do business with the Australian Government, including those listed at the end of this guide.

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Step One - Know Your Customer

Know Your Customer

At first glance the government market might seem like a confusing maze of different departments, restrictive processes and bewildering jargon.

But selling to government doesn't have to be difficult if you understand your market and focus your efforts.

To successfully sell to government, you need to:

• Identify the right customers;
• Understand what they want;
• Know how they operate; and
• Offer them best value for money.

Who are the Players?

A common misconception is that there is a single procurement market at the Australian Government level, with a centralised list of suppliers and standard purchasing arrangements.

In fact, this is generally not the case. While the Commonwealth Procurement Guidelines set out the overall framework for Australian Government procurement, individual departments and agencies are largely responsible for their own business decisions and processes.

There are currently more than 100 departments, agencies, authorities and companies subject in some way to the Commonwealth Procurement Guidelines. For the purposes of this guide, all these government bodies will be referred to as ‘agencies'.

Within these agencies, there are often many different areas responsible for buying private sector goods and services. This means that there is no one ‘government market' but many agencies effectively operating as separate markets and literally thousands of people across Australia making purchasing decisions on behalf of the government.

It is worth investing the time to get to know the particular business requirements of different agencies so you can better target the most relevant markets for your business.

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Step Two - Understand the Rules

How Does the Government Buy?

While the responsibility for procurement is significantly dispersed, everyone who makes government purchasing decisions is guided by an overarching policy framework.

The Commonwealth Procurement Guidelines (the Guidelines) are issued by the Minister for Finance and Administration and outline the fundamental principles for government procurement of all goods and services.

Value for money is the core principle underpinning Australian Government procurement.

The Guidelines explain how value for money is to be achieved through:

• encouraging competition;
• promoting the efficient, effective and ethical use of resources;
• accountability and transparency.

These terms are each further explained in the Guidelines.

The legislative base for the Guidelines is the Financial Management and Accountability Act 1997 (FMA Act) and the Commonwealth Authorities and Companies Act 1997 (CAC Act) and related regulations and directions, which place specific responsibilities on officials who purchase goods and services for Australian Government agencies.

Value for Money and the Procurement Process

Value for money is not just about the lowest price. To get the best possible value for the money being spent, procurement decisions are based on broad assessment of all the costs and benefits of each proposal. A value for money assessment, based on the published conditions for participation and evaluation criteria, may include consideration of factors such as:

• the relative risk of the proposal;
• supplier's performance history;
• all direct and indirect financial costs and benefits over the life of the procurement eg ongoing maintenance costs;
• the flexibility of the proposal to adapt to possible change;
• the anticipated price that could be obtained, or cost incurred, at the time of disposal.

The government considers value for money is best achieved by appropriately competitive and non-discriminatory procurement processes.

For this reason, agencies must comply with different mandatory obligations and procedures depending on the value of the goods and services they are buying. The value thresholds that trigger these procedures are explained below. By following these strict procedures, agencies offer you a process that is efficient, effective, transparent, accountable and equitable for all competing suppliers.

When purchasing, agencies also comply with their own specific operational procedures and guidelines. While the details may vary from agency to agency, all align with the overall framework provided by the Guidelines.

Business Opportunities Below the Threshold

Where the value of goods or services sought is below the threshold, agencies have substantial flexibility to decide on a procurement process appropriate to the scale, scope and relative risk of the proposed procurement.

This may be:

• an over-the-counter purchase;
• a limited invitation to one or more suppliers for written or oral quotes;
• an approach to the market through limited invitations to tender;
• a public approach to the market through an open tender process.

While there are fewer procedural rules for procurements below the threshold, the focus is still on value for money and equitable treatment of competing suppliers.

As many of these procurements are not advertised publicly, it is important that agency buyers are aware of the products, skills and capacities of the marketplace.

Therefore, as a potential supplier you need to promote your products and services as a value for money proposition for government, in the same way as you would when dealing with other consumers and the private sector.

Business Opportunities Above the Threshold

More comprehensive procedural rules apply to most procurements valued above the threshold. You can expect these basic procedures to be applied on a consistent basis across all agencies.

The procedures are based on the underlying presumption that there will be an open approach to the whole market for these purchases. They allow for the following procurement methods, which are explained in the table opposite:

• open tendering such as:
  • requests for tender
  • requests for expressions of interest
  • requests for application for a multi-use list
• select tendering, following an open process to short list suppliers
• direct sourcing (only permitted in limited circumstances).

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Procurement Method	Approach to the Market	Description
Open tendering	Open approach in the form of a Request for Tender	Agencies use an open request for tender to publicly invite all potential suppliers to bid for work: interested suppliers may respond by providing the required information; all responses are evaluated against the stated selection criteria; in most cases the preferred supplier is then selected directly.
	Open approach in the form of a Request for Expressions of Interest	Agencies often use a request for expressions of interest to elicit innovative solutions or where full job specifications are not yet available: this is typically the first stage in a two-stage process; interested suppliers are invited to respond by submitting the required information (usually not as much detail as a request for tender); suppliers are then short listed either for a select or direct tender process (see below).
	Open approach in the form of a Request for Application for a Multi-use List	This is the first stage in a multi-stage tender process, which creates a list of pre-qualified suppliers: interested suppliers can submit the required information; suppliers who meet the conditions for participation are added to a multi-use lists; agencies can then invite suppliers from the list to tender for work. While being on a multi-use list is no guarantee of work, it does mean the agency has recognised your capacity to provide particular goods or services.
Select tendering	Select approach to a limited number of suppliers nominated by the agency.	Agencies may directly approach a limited number of suppliers to invite them to tender: such a select tender process may only occur after an initial open approach to the market - that is after inviting expressions of interest or selecting from a multi-use list - or if the pool of suppliers is already limited by a need for special licence or other legal requirement; agencies are still required to select the largest number of suppliers to participate, consistent with an efficient procurement process.
Direct sourcing	Direct approach to a single supplier or limited number of suppliers.	Agencies may directly approach one potential supplier only in specific circumstances such as: cases of extreme urgency beyond the control of the agency; where an unsolicited and highly-advantageous opportunity arises, representing an unusual value for money opportunity; if the goods or services can be provided by only one supplier, like a work of art.

Panel Arrangements

Agencies may decide to establish a panel of suppliers and then purchase directly from suppliers on the panel as required. As a member of a panel, you can therefore supply goods or services that the agency needs on an ongoing or intermittent basis without the need to repeatedly participate in further tender processes. Some typical services provided through panels include legal, accountancy, human resources, building and maintenance, and design services.

Being included on a panel greatly improves your chance of receiving future work from the agency, although no minimum amount of work is guaranteed. Panels are an attractive option for many agencies because the tender process only needs to be carried out once to test the market and establish the panel, rather than having to conduct separate tender processes for each purchase. To be included on a panel:

• respond to a request for tender to become a panel member - this is usually issued through an open approach to the market, although in some cases select tendering may be used;
  
• if successful, you will then enter into a contract or deed of standing offer with the agency to provide the goods or services as required for a specified time;
  
• you can then provide your goods or services directly to the agency as required, either with or without the need to quote for specific jobs.

As a supplier, it is worth remembering that panels are often in place for one or more years and you will be held to the terms and conditions of the contract or standing offer, including any price/fee structure you quoted. Also, agencies are usually free to purchase similar services from suppliers outside the panel.

Opportunities to participate in open tender processes for panels are advertised through AusTender [] .

Multi-Use Lists

Multi-use lists are lists of all suppliers who have satisfied certain preconditions to supply particular goods or services. In contrast to a panel arrangement, multi-use lists provide only a starting point, as agencies using a multi-use list must still undertake an open or select tender process to make a purchase. Inclusion on a multi-use list is therefore no guarantee of receiving work.

As for panels, multi-use lists are usually set up to provide goods or services that the agency needs on an ongoing or intermittent basis. Multi-use lists must be open for new applicants continuously, or at least annually.

Being included on a multi-use list that is used by more than one agency may help raise your profile in the broader government market. Multi-use lists can be used to conduct select tender processes, so inclusion on a list could mean the difference between whether or not you are invited to compete for a particular opportunity or not.

Opportunities to apply for inclusion on all multi-use lists are advertised through AusTender [] .

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Step Three - Understand the Process

Roles and Responsibilities in a Typical Government Procurement Process

Whenever the government buys from the private sector, a similar logical process is followed. The scale of the process and specific approach adopted will vary depending on the scope and complexity of the job, but the roles of the agency and supplier remain essentially the same.

Agency Role	Your Perspective
Planning the Procurement
The agency defines its desired outcome and specifications, identifies risks and develops its business case.	You may be approached informally by an agency that is researching the size and maturity of the market, or sounding out the availability of products and services.
Deciding which Process to Use
The agency determines which process it will use to find its supplier- this usually involves an open approach to the market, but possibly a select tender process or direct source approach.	To give your business the best change of being considered for a select tender or direct source procurement process, be sure you: apply for any multi-use lists relevant to your products and services; register your business profile through AusTender to receive up to date information; are registered or licensed, if necessary, to provide the particular goods or services; make your target agencies aware of your offerings and capabilities.
Approaching the Market
The agency approaches the market using whichever process it decided was most appropriate. The general principle is that all suppliers are provided with an equal opportunity to make a submission.	All open approaches to the market are advertised through AusTender; The tender should remain open long enough for you to submit a considered response, typically at least 25 calendar days; The agency should advise you of any changes to the tender documents, and provide answers to questions asked by you and your competitors; You may have an opportunity to attend a Q&A briefing session.
Evaluating Submissions
The agency evaluates submissions in accordance with the procedures and criteria outlined in the request document, selects a preferred supplier(s), and notifies unsuccessful tenderers.	It is essential that your submission meets all stated requirements; Be sure your submission is received on time and in the manner requested in the tender documentation, or it will not be considered. Your submission will be evaluated against the published evaluation criteria; You can expect your submission to be treated in confidence; If you are unsuccessful, you can request a debriefing to assist in the preparation of future submissions.
Concluding the Process
The agency concludes the procurement process by awarding a contract. This may require some final contract negotiations, and a number of accountability measures must also be complied with, such as reporting the contract through AusTender and the finalisation of records.	If you are successful, there may be matters you wish to negotiate before signing the contract, such as how your confidential information will be recognised and treated. Make sure you are willing and able to comply with the contract before you sign; Details of your contract will be published on AusTender (if over $10 000); If you have a concern or complaint about the conduct or outcome of the tender process, approach the agency with your concern in the first instance.
Managing the Contract
The agency manages the contract to ensure ongoing performance and that value for money is achieved. This may include managing contract extension options, termination or transition to a new supplier.	Maintaining open communications with the agency contract manager will help build a productive and amicable working relationship and reduce the chances of conflict arising through the misunderstanding; Raise issues with the agency as they arise, don´t let them grow into something that could cause lasting damage to your relationship with the agency; Solid contract performance, on time and meeting all requirements, will provide value for money and enhance your reputation in the Government market.

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Step Four - Watch for Opportunities

AusTender Website

You will find all forms of publicly available business opportunities advertised online through the AusTender [] system.

There are four basic categories of information:

• proposed tenders;
• current opportunities;
• recently closed tenders undergoing evaluation;
• contracts reported.

Search facilities help you identify individual tenders or contracts which may be of interest. For example, you can search for relevant business opportunities based on a variety of indicators including the agency name, category of goods or services, or the closing date for submissions.

There are also links to many related government agency sites, procurement policy information, the Business Entry Point, and State and Territory Government sites.

Assistance on using AusTender is available through the website and from the AusTender Help Desk on 1300 651 698 or by email.

Registering with AusTender

One of AusTender's most useful features for any potential supplier to government is the subscription service that allows you to register your area of business interest. You can then receive free automatic email notifications of the latest opportunities as they are advertised. Depending on the agency involved, you may also be able to:

• view and download tender documentation;
• lodge submissions in response to market approaches in a secure electronic environment.

When you register with AusTender, it is important to include the widest range of product categories possible to make sure you are notified of all relevant opportunities. It is also important to be aware of the technological requirements for viewing and downloading tender documents, and submitting your tender response electronically.

Proposed and Current Opportunities

Approaches to the market advertised through AusTender include requests for tender (including panel arrangements), requests for expressions of interest and requests for applications for inclusion on a multi-use list.

Annual Procurement Plans

From June 2005, the AusTender website is also where you will find agency annual procurement plans, to be published before 1 July each year. Annual procurement plans are designed to give advance notice to potential suppliers about expected procurement needs for the forthcoming financial year. They:

• provide a short summary of the strategic procurement outlook for each agency, based on the activities within the agency that are likely to require larger and/or important purchases of goods and services over the coming year;
  
• contain information on specific procurements expected during the coming year.

The content and level of detail will vary from agency to agency. However, such forward planning can help you identify and plan for future business opportunities, so it is worth checking the annual procurement plans of agencies you would like to do business with.

Contracts Awarded

AusTender allows you to follow procurement processes through to the stage of the contract being awarded.

Details of all contracts and standing offers valued at $10 000 or more are reported in AusTender and can be viewed online. This information may be particularly useful for unsuccessful tenderers in identifying key competitors, and for general background research on what agencies are buying.

The search facility helps you identify contracts of interest. Information available includes the name of the agency and the contractor, the total contract value, contract start and end dates, and a brief description of the contract.

Step Five - Build Relationships

Promote Yourself

Responding to agency approaches to the market is not the only way for you to sell to government.

When seeking quotes for smaller purchases, agencies may only approach suppliers they know about.

There are many steps you can take to understand the needs of government agencies and market your business as providing attractive, value for money solutions.

Just like business development in the private sector, it is important to build relationships and ensure your potential government customers are aware of your capabilities and have confidence in your ability to deliver.

To help get you started, here are some basic tips on marketing to, and doing business with, Australian Government agencies:

• Try to identify the agencies likely to need your goods or services, and within those agencies, identify the specific areas or individual buyers who are most likely to make purchasing decisions;
• Develop your relationships - meet with the relevant people, and provide information such as a corporate profile, track record, testimonials, website address, pricing schedules and contact details (but don't flood agencies with advertising material or constant phone calls);
• Make sure agency buyers know what sets you apart from your competitors;
• Be aware of any regulatory requirements, conditions, pre-qualifications, licences etc that you might need to supply to the agency;
• Maintain contact with agencies to ensure you are aware of future prospects;
• You will need to invest time and resources to enter the government market with success, but if your initial strategy is not working, it may be worth changing your approach;
• Consider the benefits of strategic partnerships with other businesses that sell to the agency you are interested in;
• Build a reputation for providing value for money - bid competitively and wherever possible add extra value.

Play by the Rules

Officials and suppliers should at all times aim to conduct business on the basis of mutual trust and respect.

Australian Government officials are required to buy goods and services in an ethical, accountable and transparent manner. They must not seek gifts or other favours from potential suppliers, and should follow procedures and protocols designed to ensure a fair and consistent approach to procurement activities.

Likewise, potential suppliers should not approach agency officials in a way that might be interpreted as an attempt to improperly influence agency purchasing processes.

Other Avenues to Government

Strategic partnerships

It is not always necessary to have a direct relationship with an agency to sell to it. An important alternative way of accessing the government market is through building relationships with other businesses that are already selling or want to sell to government.

Strategic business relationships can take a number of forms and can offer substantial benefits. For example, by forming a consortium to pool resources and capabilities and submit a joint bid, you can reduce your tender costs and participate in projects you could not bid for individually.

Probably more common than joint bids are prime/sub-contractor arrangements. Under these arrangements, suppliers who are awarded prime contractor status use sub-contractors to perform some or all of the services required by the agency. Developing relationships with these prime contractors can be a relatively simple and attractive way to access the government market.

The key is to build relationships with other businesses in your industry and related industries, and make full use of your business networks. Networking can be the best way to find other suppliers to work with, but industry associations and business consultants can also act as brokers on your behalf. It is important to plan ahead - it is much easier to develop your relationships before a tender is announced than during the bidding process.

Who's Who?

One of the difficulties associated with marketing directly to government buyers
can be how to identify which agencies might use your goods or services, and then finding the appropriate people within those agencies.

AusTender can be a useful source of information for this purpose, but the Government Online Directory [] is another useful tool to help you understand the structure, roles and functions of the agencies that comprise the Australian Government.

It provides functional descriptions of all agencies, including contact details and information on key senior staff.

Business Entry Point

The Business Entry Point provides a wide range of information for businesses, particularly in relation to interactions between business and government. Information includes details about setting up and registering a business, licences and permits, and getting your business online.

Importantly, the website provides links to business opportunities and related information at the Commonwealth, State, Territory and local government levels.

The Business Entry Point [] also supports a government and business directory, providing contact details for a large number of government and business organisations.

Defence Unsolicited Proposals Gateway

The Department of Defence receives many ‘unsolicited proposals' from industry due to its unique business requirements. These proposals may range from small, off-the-shelf supply items to more complex capability solutions. Defence has therefore established an Unsolicited Proposals Gateway [] to provide a single entry point for businesses and individuals to submit their proposals to Defence.

Industry Capability Network

Industry Capability Network is a national organisation that introduces local buyers and sellers for the development of effective supply chains using Australian and New Zealand companies. Registering with Industry Capability Network can introduce your products and services to buyers seeking competitive and capable local suppliers.

While there is no obligation for Australian Government procurement officers to use Industry Capability Network, registering through the network may help you access business opportunities in both the public and private sectors, in Australia and internationally.

Industry Capability Network has 24 offices located around Australia and New Zealand and all its core services are free of charge. For further information, or to contact your local Industry Capability Network [] office.

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Step Six - Compete to Win

Compete to Win

When you have identified an opportunity to supply to the Australian Government, the next step is to compete for the business.

Of course there is no guarantee of success when competing for any business, but there are some basic rules and better practices that will help to ensure your bid for government work has the best possible chance of success. It is absolutely vital that you pay careful attention to the requirements set out in the tender documentation.

What is Involved in a Typical Tender?

Typical tender documents will include some, if not all, of the elements detailed in the table which follows.

Tender Content	What does that Mean?
A Description of the Procurement	The request document describes the goods or services being procured. This might include: the nature and scope of work; the ‘deliverables' or expected outcomes; any technical specifications eg performance and functional requirements; any need for installation, training, support or maintenance; timeframes for delivery of the goods or services.
Conditions for Participation	The conditions for participation are the minimum requirements you must meet to be considered for the work. Agencies include these to make sure you have the legal, financial, technical and/or commercial capabilities to perform the contract. Some examples might include: relevant licenses or professional accreditations; ability to meet security requirements; minimum occupational health and safety standards; minimum levels of insurance or financial resources; prior experience or a specific capability.
Evaluation Criteria and Methodology	Your submission will be assessed against the evaluation criteria so they provide critical guidance on what you need to demonstrate to win the business. Evaluation criteria are often weighted according to their relative importance, and of course will vary from tender to tender. Some examples include: demonstrated ability to provide the goods or services; ability to manage risk; pricing; compliance with stated contract conditions. The tender may also describe the evaluation methodology, for example, whether tenderers will be short listed before a successful supplier is chosen.
Minimum Content and Format Requirements	Minimum content and format requirements explain what information your tender response should contain, and the format that you need to use. For example: in terms of content, you may have to provide certificates of insurance or a particular licence to support your submission; in relation to format, you may need to use specific schedules, or submit your response electronically.
Process Rules	Process rules relate to how the tender will be run. For example: the deadline and location for lodging your response; protocols for answering your questions and distributing answers to all tenderers; procedures to be followed if amendments to the tender documents are needed during the process; how your confidential information will be treated both during the tender process and after the contract is awarded.
The Draft Contract	A draft contract is included in tender documents to make sure you clearly understand the requirements of the agency: you may be required to indicate your compliance with the clauses of the draft contract in your tender response; you should therefore make sure that you are willing to comply with the terms of the draft contract before submitting your tender, or indicate where you wish to negotiate alternative clauses.

Qualities of Successful Tenders - A Quick Checklist

The following checklist presents some key points to consider when preparing your tender submission.

Have you targeted the best opportunities?

Participating in tender processes can involve substantial costs with no guarantee of success. Take the time to determine whether each opportunity is potentially rewarding and cost-effective to pursue, based on whether you have a reasonable chance of winning the business.

Do you understand all the requirements?

It may sound simple, but be sure to read the tender documents carefully, highlight key points, and seek clarification from the agency contact if you are uncertain about any issue. For example, are you required to quote prices inclusive or exclusive of Goods and Services Tax?

Have you attended any briefing offered?

To be fully informed, attend a briefing or Q&A session if they are offered. Many industry briefings are compulsory and, in any case, they provide an opportunity to ask questions and make contact with the agency representative in charge of the tender process.

Have you planned your tender and allowed plenty of time to meet the deadline?

Late tenders will not be accepted, so make sure you know where and when your tender must be lodged. If you need to form a consortium or engage sub-contractors to complete the work, be sure to allow others enough time to provide input into the tender submission.

Is your response straightforward and to the point?

There is no standard format for tender responses - they vary depending on the nature and complexity of the procurement. However, you will always need to complete any mandatory forms and follow suggested formatting style or templates and schedules provided. Your tender will be evaluated on content, not extravagant presentation. It is also a good idea to use simple, straightforward language and keep to the point.

Have you addressed all mandatory conditions for participation and evaluation criteria?

It is extremely important to demonstrate that you comply with any necessary conditions, and that you address all the evaluation criteria and any other specified requirements. Make sure you can comply with the terms and conditions of the draft contract. Remember, if you do not address the evaluation criteria, there is no point in submitting a tender response.

Have you demonstrated value for money?

Value for money is the key consideration of government agencies. Price is obviously important, but so too are service standards, quality, performance and whole-of-life costs. Always bid competitively the first time; you will probably not be given a chance to improve your offer later in the process. Equally, don't underprice to win the work assuming you will be able to extend the value of the contract or increase your price down the track - you will be expected to stick to the price you quoted.

Have you emphasised what sets you apart from your competitors?

Think about how you would evaluate your tender against the evaluation criteria if you were the official responsible for assessing tender responses. You may wish to emphasise areas where you exceed the requirements, and where you feel you can add value for the agency. Your tender will usually be competing against several alternative proposals, so be sure to clearly identify potential points of difference from your competitors.

What if You Don't Win the Work?

Of course, not all tender responses can be successful, no matter how good they are. However, the experience of an unsuccessful tender should not be a signal to give up on doing business with government. Rather, consider an unsuccessful tender process as a chance to learn and improve your offering for the next business opportunity.

Tender Debriefings

Debriefing sessions are an important part of any tender process. The primary purpose of a debriefing is to help potential suppliers submit more competitive bids in the future.

They can be a valuable source of information on the strengths and weaknesses of your tender and help you prepare better responses to future tenders.

Many agencies wil