Rule 14:
Exemption from open advertising

1. An agency does not need to openly advertise a contract opportunity on GETS if an exemption from open advertising under Rule 14.9 applies.
2. If the procurement is exempt from open advertising, an agency must use either a closed competitive process (with a limited number of known suppliers) or a direct source process (with a known supplier).
3. An agency must not exempt a procurement from open advertising to:
1. avoid competition
2. protect domestic suppliers
3. discriminate against any domestic or international supplier.

Document the rationale

4. If an agency exempts a procurement from open advertising under Rule 14.9, it must:
   1. obtain evidence of the facts and circumstances to verify the reason/s for the exemption before starting the procurement, and
   2. document the rationale for the decision. This rationale may form part of the business case or procurement plan or may be a stand-alone document.
5. The rationale document must include:
1. the name of the agency
2. a description of the goods, services or works
3. the maximum total estimated value (Rule 8) of the goods, services or works
4. the specific exemption/s, that applies (from the list in Rule 14.9)
5. details of the facts and circumstances that justify the exemption.
6. A senior manager must endorse the rationale before the agency undertakes the procurement. The agency must retain the documented rationale for audit purposes.
7. If MBIE asks for the documented rationale, the agency must promptly make it available.

GETS Contract Award Notice

8. Agencies must publish a Contract Award Notice (Rule 48) on GETS for any procurement that it has exempted from open advertising.
9. Valid exemptions from open advertising are:
   1. Emergency: A genuine emergency as defined by MBIE’s Quick Guide to Emergency Procurement. Urgent situations that are created by an agency, such as lack of advance planning, do not constitute an emergency.
   2. Following an open competitive process: An agency may use a closed competitive process or direct source process to procure goods, services and works if:
      1. it has openly advertised the contract opportunity in the last 12 months, and
      2. it has not substantially changed the core procurement requirements, and
      3. the first time the opportunity was advertised it:
         (a) did not receive any responses, or
         (b) did not receive any responses that complied with the pre-conditions (Rule 28 or conformed with or met the requirements (including quantity), or
         (c) received responses from suppliers who it has reasonable grounds to believe have colluded, and this can be verified, and no other responses complied with the pre-conditions (Rule 28) or conformed with or met the requirements.
   3. Only one supplier: If the goods, services or works can be supplied by only one supplier and there is no reasonable alternative or substitute because:
      1. for technical reasons there is no real competition, or
      2. the procurement relates to the acquisition of intellectual property or rights to intellectual property (including patents or copyrights), or other exclusive rights, or
      3. the procurement is for a work of art.
   4. Additional goods, services or works: Goods, services or works additional to the original requirements that are necessary for complete delivery. This rule applies where all three of the following conditions are met:
      1. the original contract was openly advertised, and
      2. a change of supplier cannot be made for economic or technical reasons, and
      3. a change of supplier would cause significant inconvenience or substantial duplication of costs for the agency.
   5. Prototype: Purchasing a prototype for research, experiment, study or original development. Original development may include a limited production or supply if this is necessary to:
      1. carry out field tests and incorporate the findings, or
      2. prove that the good or service or works can be produced or supplied in large numbers to an agreed quality standard. This exemption does not apply to quantity production or supply to establish commercial viability or to recover research and development costs. Once the contract for the prototype has been fulfilled, an agency must openly advertise any subsequent procurement of the same goods, services or works.
   6. Commodity market: Goods purchased on a commodity market.
   7. Exceptionally advantageous conditions: For purchases made in exceptionally advantageous conditions that only arise in the very short term. This exemption does not cover routine purchases from regular suppliers.
   8. Design contest: Where a contract is awarded to the winner of a design contest. To meet this exemption:
      1. the design contest must have been organised in a manner that is consistent with the Rules, and
      2. the contest must be judged by a panel whose members understand that the winner will be awarded a contract, and
      3. members of the panel do not have any conflict of interest in carrying out the judging of the contest.
   9. Secondary procurement: Where an agency has established a panel of suppliers (in accordance with Rule 57) or is purchasing under an All-of-Government contract (Rule 58), Syndicated contract (Rule 59) or Common Capability contract (Rule 60), it does not need to openly advertise individual contract opportunities that are awarded through that arrangement.
   10. Unsolicited unique proposal: Where an agency receives an unsolicited proposal, as described in MBIE’s Guide to unsolicited unique proposals, and all of the following apply:
       1. the proposal is unique
       2. the proposal aligns with government objectives
       3. the goods, services or works are not otherwise readily available in the marketplace
       4. the proposal represents public value.