Answering your Questions on Framework Agreements
Posted by Diane Callaghan on May 27, 2010
What is a framework agreement?
A framework agreement is an ‘umbrella agreement’ that sets out the terms (particularly relating to price, quality and quantity) under which individual contracts (call-offs) can be made throughout the period of the agreement (normally a maximum of 4 years).
Do framework agreements need to be advertised in OJEU?
If the procurement is being paid for out of the public purse and the value of all the potential call-offs is estimated to exceed the EU thresholds (and it is not excluded by part B of the regulations) then yes, the framework agreement should be advertised in the Official Journal of the European Union (OJEU). However, the individual call-offs do not then need to be re-advertised.
What is commonly procured using framework agreements?
Framework agreements are typically used where the authority knows they are likely to have a need for particular products or services, but are unsure of the extent or schedule. So framework agreements are commonly set up to cover things like office supplies, IT equipment, consultancy services, repair and maintenance services etc.
Who can use a framework agreement?
Many framework agreements can be utilised by more than one authority. If this is the case, the purchasing authorities need to be identified in the relevant OJEU notice. An example of frameworks available to a wide range of purchasing authorities are those formed by Buying Solutions (an Executive Agency of the Office of Government Commerce), a central purchasing body who create framework agreements for use across the whole of the UK public sector.
How can I get onto a framework agreement?
If the framework agreement has been advertised in OJEU, you can only be considered for inclusion on the framework agreement if you respond to the OJEU notice by the stated deadline. The procurement process for awarding the framework agreement will then follow all the usual EU procedures and rules and be awarded according to how well suppliers satisfy the selection criteria.
How are call-offs awarded under a framework agreement?
If the framework agreement is awarded to one provider, then the purchasing authority can simply call-off the requirement from the successful supplier as and when it is needed. Where the framework is awarded to several suppliers, there are two ways in which call-offs might be made:
1) Where the terms laid out in the framework agreement are detailed enough for the purchasing authority to be able to identify the best supplier for that particular requirement, then the authority can award the contract without re-opening competition.
2) If the terms laid out in the framework agreement are not specific enough for the purchasing authority to be able to identify which supplier could offer them best value for money for that particular requirement, a further mini-competition would be held between all the suppliers on the framework agreement who are capable of meeting the need.
What are the advantages of framework agreements?
The main advantage to a purchasing authority of using a framework agreement is that they do not have to go through the full OJEU process every time the requirements arise. Having to go through the tender procedure once rather than several times, will obviously reduce tendering costs. It also means there is less downtime between identifying the need and fulfilling it, which considering how lengthy the OJEU process can be, could be a considerable benefit. There are also further potential savings to the purchasing body because of economies of scale, which may prompt suppliers to offer more competitive prices.
The reduction to tendering costs will also apply to suppliers, as going through the tender procedure is costly and time-consuming for suppliers too. Obviously, the main advantage to suppliers of being on a framework agreement is the chance of being awarded valuable business opportunities.
What are the disadvantages of framework agreements?
A disadvantage of a framework agreement for a purchasing authority is that they are relatively unresponsive to change – there may be new suppliers and/or new solutions within the market that were not included when the framework agreement was initially set up. Furthermore, framework agreements tend to apply a ‘one size fits all’ approach, which might make it difficult for authorities to satisfy their own procurement objectives. However, most framework agreements do not place any obligation on the purchasers to actually buy anything. Therefore, if the requirement doesn’t fit into the framework agreement or they think they can achieve better value for money not using it, then they can go elsewhere.
This in turn is a disadvantage for suppliers under the framework agreement; most frameworks do not guarantee that suppliers will get any business from them. Therefore, you may spend a lot of time, effort, and resources getting included on a framework agreement and never get any business as a result. However, you are still in with a chance, whereas suppliers not included on the framework (whether they were unsuccessful or were not aware of it when it was tendered) are likely to find it more difficult to secure business for the requirements covered by the framework agreement. It is therefore a good idea for suppliers to investigate what framework agreements already exist and when they might be up for retender. And for those suppliers included on frameworks, don’t take the business for granted – continue to market your products or services to the purchasing authorities !
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