Limited Tender

What is a Limited Tender?

A Limited Tender (sometimes called a direct source or sole source procurement) is the most restrictive procurement method available to Australian government agencies. The agency approaches one or a very small number of suppliers directly, bypassing both public advertising and broader competitive processes.

When Can a Limited Tender Be Used?

Limited tendering is only permitted in specific circumstances defined by procurement rules. Under the Commonwealth Procurement Rules (CPRs), these include:

• Genuine urgency — an unforeseen event creates an urgent need that cannot wait for an open process
• Sole supplier — only one supplier can provide the goods or services (e.g., proprietary technology, intellectual property restrictions)
• Standardisation — compatibility with existing equipment or systems requires a specific supplier
• Additional deliveries — a follow-on order to an existing supplier where changing suppliers would cause significant incompatibility
• No suitable responses — an Open Tender or Select Tender was conducted but received no compliant responses

Probity Requirements

Because limited tendering bypasses competition, agencies face heightened Probity requirements. They must:

• Document the justification for using a limited approach
• Obtain appropriate approvals from senior officials
• Report the procurement on AusTender after the contract is awarded (for Commonwealth agencies)

Tips for Tenderers

• Position yourself as the sole credible option — if you hold proprietary technology or unique capability, make agencies aware of it through RFI responses and industry engagement.
• Be responsive when approached — limited tender timelines are often compressed due to urgency.
• Do not rely on limited tenders as a strategy — agencies prefer competitive processes, and overuse of limited tenders attracts audit scrutiny.