Framework Agreements: What are they and Why Do We Use Them?
The Public Contract Regulations 2015 define framework agreements as:
“An agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged.”
That is to say, a framework agreement is a general phrase for agreements with providers that set out the terms and conditions under which agreements for specific purchases can be made throughout the term of the agreement. The specific purchase contracts are known as call off contracts and are not subject to EU procurement rules. However the framework agreement itself is subject to EU procurement rules.
In most cases a framework agreement will not itself commit either party to purchase or supply.
The principal advantage in using framework agreements for buyers is that they do not have to go through the full tender process every time they require a product or service during the agreement. Likewise for the supplier, with a resultant saving in tender costs for them both.
However, from a supplier’s point of view, being admitted on to the framework agreement does not guarantee a flow of work or orders (especially where there are multiple suppliers on the framework agreement) and they should continue to market their goods and services to the buyer.
Under the Public Contracts Regulations, framework agreements may last only four years, but call off contacts under them may be longer than four years and may extend beyond the expiry date of the framework agreement.
So there are very clear advantages to both parties operating under a framework, but one commentator takes a more jaundiced view of the process:
“I’m a submariner. I rely on public contract awards being published. Once a framework has been established, subsequent contracts awarded to economic operators in the framework do not have to be published. This is unhealthy because it hides the contract, its reason, cost and conduct from other contractors, public and official scrutiny. This is why frameworks are so popular amongst government and public authorities, distressed by having to justify, cost out and run demanding contracts in the public eye. So much for openness and transparency!”
Ah well. There is always one.
If you would like to learn more, contact our Procurement Team.