Using Framework Agreements
Formally, it is an agreement between one or more contracting authorities and one or more suppliers which establishes the terms (in particular the terms as to price and, where appropriate, quantity) under which the supplier will enter into one or more contracts with a contracting authority in the period during which the framework agreement applies. Such framework agreements set out the terms and conditions for subsequent call-offs but place no obligations, in themselves, on the procurers to buy anything. With this approach, contracts are formed under the Regulations only when goods, works and services are called off under the framework agreement.
In layman's terms, a framework agreement sets out the overarching terms and conditions (such as maximum pricing or minimum service levels) that users of that framework agreement can expect to receive after they have entered into their own (entirely optional) contracts with approved suppliers to the framework agreement. Whilst these terms and conditions are set at framework level, there is usually flexibility (within reason) for users to adapt the framework agreement to meet their own particular requirements when 'calling off' (or contracting with a specific supplier). The method of call-off will vary from agreement to agreement, so do check the Buyer's Guide on HE Contracts.
Framework agreements are not contracts and there is no obligation on members to use them. LUPC framework agreements are only open to members of consortia named in the original tender contract notice, for compliancy with the Public Contracts Regulations. Our framework agreements usually last for four years before being re-tendered.
Buying through multi-user framework agreements is a good idea because:
- Framework agreements are a pre-competed route to market providing a vehicle to centralise procurement spend
- Shared procurement expertise and resources
- Shared risk and contract management
Framework agreements reduce administrative burden:
- Time and cost compared to running a full procurement procedure each time (and helps to ensure legal compliance).
- The requirement has been advertised and capable suppliers have been identified through competitive procurement, so at mini-competition there may be fewer tenders to evaluate for each requirement - particularly if the framework agreement is divided into distinct lots.
- At mini-competition it should be easier to compare tenders, particularly where the framework agreement is divided into distinct lots, because the products and services making up those lots will normally have been defined and categorised when the framework agreement was established.
- Flexibility: use of framework agreements is not mandated and authorities are free to use framework agreements where they provide value for money or to go elsewhere if they do not (but when taking into consideration the potential savings of going elsewhere you would of course need to factor in the potentially considerable cost of running your own procurement exercise).
- Security of supply (on multi-supplier agreements) - if one supplier on a framework agreement runs into difficulty there would still be other suppliers who are capable of delivering the requirement.
Framework agreements aggregate demand:
- Larger volumes are more attractive to suppliers and can achieve lower unit costs
- Smaller organisations working together will gain benefits usually only achievable by large organisations
- Lower bid costs are incurred by suppliers, and passed on to buyers
- Opportunities to standardise goods, services and operations across framework agreement users to further reduce costs
The Directives state that creating ‘frameworks within frameworks' by selecting 2 or 3 approved suppliers either with or without some form of due process and then simply re-opening competition for each requirement should be avoided. You may, however, sub-divide your requirements at the time of competition and appoint a ‘specialist’ following the previously described guidelines. In IT for example, an organisation could request separate bids within their specification for low-spec lab PCs, high-spec workstation-class machines, low-energy footprint PCs and ‘all-in-one’ solutions.
Equally and provided they are separately specified up front, an organisation may create a single mini-competition using date-based requirements that leads to for example, one supplier winning business for an early summer roll-out but then another for a separately specified autumn-time delivery.
LUPC staff are very happy to talk you through the use of framework agreements, and the various ways to call-off from them. As this process varies from agreement to agreement, we recommend you read the framework agreement Buyer's Guide, available on HE Contracts, or speak to the relevant LUPC Category Manager.