Framework Agreements – The Open and Closed Options
Framework Agreements are key procurement tools and their use is, more or less, widely understood by buyers and suppliers.
Framework agreements have been around a long time; there’s even a wonderful ‘urban myth’ that Nelson’s cannons for his fleet at Trafalgar were procured from a naval framework.
Frameworks differ from public contracts, as they don’t legally guarantee any business to bidders awarded places on them. This can, occasionally, from a buyers perspective, make it difficult to get the right contractors onto the framework and makes the use of it by other contracting authorities more difficult.
The UK Government’s ‘Transforming Public Procurement’ Green Paper proposed changes to framework structure which has, through the new Procurement Bill, proposed two approaches to frameworks:
Closed Frameworks
In this approach, frameworks will continue to be used as they currently are, with a lifespan of four years for Public sector and eight years for both the Utilities and the Defence and Security sectors.
As with current frameworks, these would be closed off to any suppliers other than those who had gained a place on them following a compliant procurement procedure.
Single supplier frameworks will need to be established as Closed Frameworks.
Closed Frameworks will enable the future award of a contract without further competition in the marketplace; either by awarding to the sole supplier party to the framework, or by applying the framework methodology for a mini competition between the supplier’s party to the framework.
If a framework needs to have a term greater than the four or eight years specified, the justification for this must be detailed in the tender or transparency notice.
So far, nothing different for buyers, however, the approach to Open Frameworks may shake things up a little
Open Frameworks
The Procurement Bill defines these as a “scheme of frameworks that provides for the award of successive frameworks on substantially the same terms”.
Unlike the current Framework structure, this proposal would allow for suppliers to apply (via a tender) to join the framework at predetermined points.
The Procurement Bill requires an Open Framework to provide for the award of a framework (contract), at least once during the period of three years beginning with the award of the first framework in the scheme, and at least once during each period of five years beginning with the award of the second framework in the scheme.
This will require the preceding framework to expire, upon award of the successor framework and for the final framework to expire at the end of the period of eight years after the award of the first framework.
However, the interesting takeaway from the wording in the Procurement Bill, is ‘at least once’.
This would suggest that a contracting authority could have the first and each successive framework run for a shorter period, so perhaps having 4 x 2 year frameworks, proviso the fourth framework expires eight years after the award of the first framework.
In the Open Framework, suppliers on the first (and each subsequent) framework would be given the option of having their original tender re-evaluated, or of submitting an updated bid, however, if either the original tender or the updated bid was unsuccessful, this would see the supplier removed from the next framework.
Buyers would need to re-open competition on essentially the same terms that the first framework was awarded.
Contracting authorities will be able to limit the number of suppliers on a framework at any one time (this must be at least two). To ensure competition, where the contracting authority chooses not to limit the number of suppliers on an Open Framework, then they may award the framework to an existing supplier either by reference to the fact that the supplier is already on the framework, or has submitted a tender for an earlier award, or a tender relating to the current award.
It should be noted that if a framework under an Open Framework is awarded to only one supplier, the framework, will become a Closed Framework and must expire within four years beginning on the day the framework is awarded.
Administering an Open Framework will clearly place an additional administrative burden on contracting authorities, depending on how many times the framework is to be reopened.
Whether contracting authorities chose to have closed or open frameworks, they will be required to include terms permitting them to remove suppliers from a framework agreement if any of the exclusion grounds apply during the term of the framework, subject to self-cleaning.
Also potentially contentious, is the proposal for fees or levies to be charged to a participating supplier, although this would be restricted to when contracts are awarded under the framework and the supplier submits an invoice.
Find further procurement reform comment and insight at www.procurementreform.co.uk.
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