A framework agreement in public procurement is a form of procurement used to create an 'umbrella' agreement between one or more buyers and a single supplier or multiple suppliers. This overarching agreement sets out the terms and conditions under which goods, works, or services can be purchased throughout its duration.
Understanding Framework Agreements
Framework agreements are a strategic tool in public procurement designed to simplify and expedite future purchases. Instead of conducting a full procurement process every time specific goods or services are needed, public bodies can establish a framework that pre-approves suppliers and sets out key commercial and legal terms.
Think of it as establishing a pre-approved list of suppliers and agreeing on the general 'rules of the game' for potential future orders. When a specific need arises, the public body can then 'call off' from the framework agreement, either directly from a single supplier (if specified in the framework) or by running a mini-competition among the suppliers on the framework.
Key Characteristics
- Umbrella Structure: It doesn't guarantee any minimum purchase volume but establishes the framework for future contracts.
- Pre-defined Terms: This framework sets out the terms and conditions under which goods, works, or services can be purchased throughout the agreement. These can include pricing mechanisms, quality standards, delivery times, payment terms, etc.
- Multiple Buyers/Suppliers: Agreements can be between one or more buyers and a single supplier or multiple suppliers. This flexibility allows for various procurement strategies.
- Duration: Framework agreements are typically established for a fixed period, often several years.
Structure Options
Framework agreements can be structured in different ways depending on the nature of the goods, works, or services and the market structure:
- Single Supplier Framework: One supplier is appointed to cover all requirements under the framework. Call-offs are typically direct.
- Multi-Supplier Framework: Several suppliers are appointed to the framework. Public bodies usually conduct mini-competitions among the suppliers on the framework to award specific contracts (call-offs).
Benefits in Public Procurement
Utilizing framework agreements offers several advantages:
- Efficiency: Reduces the time and resources required for repeated procurement processes.
- Speed: Enables quicker access to goods, works, or services once the framework is in place.
- Cost Savings: Can lead to better pricing through aggregation of demand or competitive mini-competitions.
- Standardization: Ensures consistency in terms and conditions across multiple purchases.
How it Works (Simplified)
- Establish the Framework: A public body runs a competitive procurement process to select suppliers for the framework agreement.
- Sign the Framework Agreement: The 'umbrella' contract is signed with the selected supplier(s), outlining all the agreed terms and conditions for potential future purchases.
- Call-off Contracts: When a specific need arises, the public body places an order (a 'call-off contract') under the terms of the framework. This might involve a direct award or a mini-competition among framework suppliers.
In essence, a framework agreement streamlines the procurement process for repeat requirements, providing a pre-agreed structure for future transactions.
