Yes it would be in breach of the regulations. The framework agreement allows you to simplify the arrangements for multiple contracts for similar goods or services, by awarding the master agreement (the framework) and then awarding call-off’s based on the terms and conditions in that agreement.

The value of all contracts for similar goods and services awarded during the financial year must be aggregated and it is the aggregate value that determines whether the contract is over the OJEU threshold. That is, the value of the individual contracts has no relevance, so even a £10,000 contract should be awarded through a framework, or advertised separately in the OJEU, if the aggregate value of all similar contracts takes it over the relevant threshold.

There’s nothing to stop you running a separate tender exercise for a £50k contract, but you couldn’t just directly award the contract, it would have to go through the OJEU process.

Would a multi-provider framework agreement with a combination of call off methods i.e. direct award for contracts up to say £50k and the re-opening of mini-competition over that £50k threshold be in breach of the regulations/directives?

I wonder if you could help. I understand that a framework can not be used if the effect is to restrict, prevent or distort competition.

A framework we are examining makes use of a Most Favoured Customer clause which prevents any suppliers on the framework from offering better pricing to any other party. In our view this has the effect of reducing and distorting competition because, in effect, it sets a price floor below which these suppliers may not operate, even if they wish to.

Additionally, we believe that the presence of the clause creates a monopolistic position for the framework operator who are a private company acting as agent for a government department. They earn significant fees from each transaction and have created a position wit their framework where it has become impossible for any other procuring organisation to compete. This alone, we believe, is a distortion of the market, restricting competition.

I would welcome your thoughts on whether the presence of the MVC clause restricts, prevents or distorts competition in contravention of the EU regulations.

Thank you

Michael

Thanks for your questions, the situation is the same under the UK regulations and the Scottish regulations so I’ll answer them both here.

Firstly, regarding the process, if it’s a multi-supplier framework the process will depend on the type of award procedure that was used to put the framework agreement in place. If it was an Open or a Restricted procedure then the utility can choose a supplier based on the original bids, or conduct a mini-competition. The option of using the negotiated procedure is also always available, which may provide more flexibility.

If the utility is selecting a supplier based on the original bids then there is no requirement to notify all the framework suppliers that they are doing so, although in terms of transparency and future competitiveness there may be advantages in doing so. In the situation where you are conducting a mini-competition or using the negotiated procedure it is clearly sensible to notify all of the framework suppliers that you are doing so in order to obtain a competitive response.

Moving on to the award stage, a utility is not required to publish a contract award notice in the Official Journal (OJEU) where it awards a contract under a framework agreement. Although again it might be considered good practice and improve competition for the future if at least the other framework suppliers are notified.

I’m afraid you are getting outside the boundaries of my expertise. I suspect that you are correct, i.e. that it would be difficult for a purchaser to enforce an agreement on a supplier.

If you don’t complete the value field in the contract notice it will still get published, i.e. the Publications Office will not block publication if this value is omitted.

Although I am not aware of any cases in the UK, I am aware that there have been informal infringement proceedings initiated against contracting authorities, in other EEA countries, who have not included this information in a contract notice.

Although it doesn’t always seem so a framework agreement is meant to be based on the anticipated requirements of the organisation or organisations that are party to the agreement.

Thanks for your question.

It all depends on the contractual terms that are attached to the framework. Most frameworks in the UK are completed on a ‘no obligation’ basis, i.e. they set-out the terms and conditions on which a call-off may be concluded but there is no obligation on the purchaser to make call -offs, or on the supplier(s) to fulfill them.

But there is no reason why the contract cannot place obligations on one or both parties and put in place financial or other penalties if one of the parties doesn’t fulfill their obligations.