In relation to procurement, an approach to market is the formal process notifying businesses of an opportunity (issuing a tender) and inviting them to participate (inviting businesses to submit a bid to supply). It is sometimes referred to as a market approach.
What is the difference between a tender and a bid?
A tender is the invitation to supply or participate in an opportunity (procurement) while a bid is a response to the invitation (the tender).
What methods are used?
There are specific ways that the government may approach the market. Typically, an approach to market will be either:
- Open – public invitation open for any interested business to provide a bid. These are advertised on SA Tenders and Contracts
- Limited – a limited number of businesses (more than one) are invited to bid. These are selected by the agency through market research
- Direct – one business is invited to bid by the agency (this is only in very limited circumstances)
Some of the most frequently used forms of tenders are:
- Expression of Interest (EOI) - usually the first stage in a multi-staged approach, outlining a general intention to buy goods and services and inviting businesses to express their interest in being considered to supply
- Request for Quote (RFQ) - often used for lower value, low risk and commonly purchased goods and services
- Invitation to Supply (ITS) (also referred to as a Request for Tender) - often used for higher value and more complex needs that requires a more complex or comprehensive bid from businesses
Approach to Market - What Suppliers Need to Know
Knowing how the government approaches the market helps you understand procurement needs and tailor your responses to them. This video explains the typical government market approaches and how to align your proposals accordingly.
