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​​Options for approaching the market

​Decide how to approach your market or provider community - open competitive processes, closed competitive sourcing, direct sourcing or competitive dialogue.

 The option you select to approach the market or provider community will differ depending on the:

  • nature and complexity of the service,
  • value and length of the contract,
  • size of the market or provider community

This will affect the format of your requirements.

You'll use a request for proposals when:

  • you can define the outcomes you want but not how they'll be delivered
  • suppliers can offer different solutions.

You'll use a tender when:

  • you're seeking goods or services
  • it's important how something is done
  • you've identified the solution you need.

Open competitive process

An open approach means the opportunity is advertised openly on GETS (the Government Electronic Tender Service) and any supplier or provider can submit a proposal.

Open competitive processes are preferred as they:

  • support innovation
  • identify new services, solutions, suppliers or providers
  • are transparent and fair to all suppliers
  • provide opportunity for open competition.

An open competitive process can be run as a single stage process or a multi-stage process.

A multi-stage open process is helpful when the market is complex and you are looking to procure high-risk, high-value or unique goods and services.

  1. Advertise an initial, open opportunity, usually a Registration of Interest (ROI). ROI's are lower effort to answer, meaning more suppliers are likely to respond.
  2. Invite a shortlist from the ROI responses to submit full proposals. Unsuitable suppliers don't waste their time preparing detailed proposals, and starting with a shortlist makes evaluation easier.

When to use it

Use an open process when:

  • you're sourcing higher-value, higher-risk goods and services
  • there are a number of suppliers who could deliver the services or outcomes
  • you're open to a range of different services.

How to use it

When using a competitive process:

  • you must advertise any open RFx worth more than $100,000 (or $10 million for construction services) on GETS
  • you can choose to advertise on other tender websites
  • check the minimum period the RFx should be open to the market in Rules 27 – 31 of the Rules of Sourcing.

Rule 15 Exemption from open advertising


Templates: Government Model RFx 

Putting your tender documents together

Competitive dialogue

Competitive dialogue is the name for a competitive process created in the European Union to allow more flexibility when dealing with complex or unusual procurements.

Competitive dialogue allows:

  • agencies to thoroughly discuss each aspect of the procurement with suppliers before specifying the requirements and inviting final proposals
  • everyone to develop a solution collaboratively.

When to use it

Use competitive dialogue when:

  • the problem you're looking to solve is complex or unusual or innovative
  • you know what your needs are but you don’t know how those needs can be met
  • the procurement is complex or high value — the competitive dialogue process is too resource-intensive for low-value procurements.

How to use it

Competitive dialogue - How competitive dialogue works in New Zealand

Closed competitive processes

In a closed competitive process, you invite a limited number of suppliers to respond to an opportunity directly, often through an RFP.

  • The opportunity is not openly advertised.
  • Unsuitable suppliers don't waste their time responding.
  • You control how many suppliers you'll have to evaluate.

This is different to a direct procurement because those invited to respond are competing against each other.

When to use it

Use a closed process if:

  • your procurement falls outside the requirement for open advertising
  • you're confident that the suppliers you approach are the only ones who are likely to be able to win the work. This is more likely to apply where there is some specialisation or other factor in the requirements which limits the number of potential suppliers
  • the procurement is lower value and lower risk.


  • the price is set and you're likely to engage all of the potential suppliers if they meet the evaluation criteria, a direct sourcing approach might be better (if allowed by the Rules)
  • you have specialised criteria but you are not sure how many suppliers there are, then use an open process with very clear criteria so that only those who meet the criteria are encouraged to respond.

How to use it


  • should request a proposal or quote from your selected suppliers
  • must follow the approach and methodology set out in the procurement plan
  • must design a fair process
  • can ask providers to demonstrate their capability to deliver the services.

You can use GETS to issue closed contract opportunities to a selected group of suppliers. Using GETS:

  • provides an audit trail for the RFx and any supplementary information (it satisfies probity requirements)
  • removes the need for emailing or sending out documents to individual suppliers
  • provides an electronic tender box to receive proposals.

Templates: Government Model RFx

Putting together your tender documents

Direct sourcing

Direct sourcing involves approaching suppliers directly. Direct sourcing includes:

  • Buying directly from any suitable supplier
  • Buying from an established panel of suppliers
  • Buying selectively from a specific supplier for a specialist service

Buying directly from any suitable supplier is typically only used for very low value, low risk purchases. When buying from a panel there may be a secondary process you need to follow as part of the panel participation agreement.

The selected supplier or group of suppliers may be asked to submit a proposal or they may be invited directly into negotiations.

Direct sourcing:

  • can also be used to extend or renew an existing contract
  • avoids a time-consuming sourcing exercise when it will not deliver the best outcome.

When to use it

You can direct source when:

  • the Government Rules of Sourcing don't apply
  • the procurement is exempt from open advertising (Rule 15), or
  • the opt-out is available (Rule 13).

If you direct source, you must still meet the Principles of Procurement.

You might use direct sourcing when:

  • the requirements are highly complex or specialised limiting the pool to a single supplier
  • the price and requirements are set and you're likely to engage all of the potential suppliers if they meet the evaluation criteria
  • the value of the contract is low and the benefits of a competitive approach are outweighed by the cost of running it
  • you're piloting a new service with limited time and resources for establishment.

How to use it


  • must follow the approach and methodology set out in the procurement plan
  • must design a fair process
  • can ask providers to demonstrate their capability to deliver the services
  • should normally request a proposal or quote, as this gives you a written offer from the provider to use when negotiating. The proposal doesn't need to be a formal RFx.