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Appendix 2: Exceptions to Open Tendering Requirement


Mandatory Rules for Procurement by Departments

[ Last Updated 3 May 2006 ]


1. Provided that the procedure is not used to avoid competition15, protect domestic suppliers or discriminate against any domestic or foreign supplier, departments may award contracts by means other than open tendering procedures in any of the following circumstances16:

  1. where, in response to a prior notice, invitation to participate, or invitation to tender under open tendering procedures
    1. no tenders were submitted,
    2. no tenders were submitted that conform to the essential requirements in the tender documentation, or
    3. no suppliers satisfied the conditions for participation, and
    the department does not substantially modify the essential requirements of the procurement in the contract as awarded;
  2. where, for works of art, or for reasons connected with the protection of exclusive rights, such as patents or copyrights, or where there is an absence of competition for technical reasons, the goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists;
  3. for additional deliveries by the original supplier which are intended either as replacement parts, extensions or continuing services for or upgrades of existing equipment, software, services or installations, where a change of supplier would compel the procuring department to procure goods or services not meeting requirements of interchangeability with existing equipment, software, services or installations, or conditions under original supplier warranties;
  4. for goods purchased on a commodity market;17
  5. when a department procures a prototype or a first good or service that is developed at its request in the course of, and for, a particular contract for research, experiment, study or original development.  When such contracts have been fulfilled, subsequent procurements of such goods or services shall be subject to the principles and procedures laid down in these Rules;
  6. when additional construction services which were not included in the initial contract but which were within the objectives of the original tender documentation have, due to unforeseeable circumstances, become necessary to complete the construction services described therein, provided that the total value of contracts awarded for additional construction services does not exceed 50 percent of the amount of the main contract;
  7. in so far as it is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the department, the goods or services could not be obtained in time by means of an open tendering procedure, and the use of such procedure would result in serious injury to the department, the department's programme responsibilities or the New Zealand Government. For purposes of this subparagraph, lack of advance planning by a department or its concerns relating to the amount of funds available to it do not constitute unforeseeable events;
  8. for purchases made under exceptionally advantageous conditions that only arise in the very short term, including public auction or unusual disposals, such as those resulting from liquidation, bankruptcy or receivership. This provision is not intended to cover routine purchases from regular suppliers; or
  9. in the case of a contract awarded to the winner of a design contest provided that the contest has been organised in a manner which is consistent with the principles of these Rules and that the contest is judged by an independent jury with a view to a design contract being awarded to the winner.

2. Whenever it is necessary for departments to resort to a procedure other than open tendering procedures based on the circumstances set forth in Paragraph 1, the departments must maintain a record or prepare a written report providing specific justification for the contract.

15 While it is recognised that competition may not be appropriate in the circumstances listed, departments must use competition-limiting methods only where necessary and justified in accordance with paragraph 2 below)

16 In exercising their discretion not to use open tendering procedures in these circumstances, departments must still, to the extent possible, have regard to the principles of the government procurement policy and good practice framework.

17 Commodity market means a market in which commodities are bought and sold for future delivery at a specific price through an exchange.


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