Market Testing

Market testing is the invitation of competitive offers from external service providers to validate the competitiveness of the incumbent provider. Public sector services are obliged to be market tested in order to demonstrate that value for money is being received. Competitive tendering allows the comparison of alternative bids against the current service, if there is one. In the early phases of compulsory competitive tendering, the current provider was usually an in-house service provider and such activities as catering, cleaning, facilities management, grounds maintenance etc. needed to be market tested. If external providers represented better value, the service would then be outsourced. See also Outsourcing.