What is a Framework Agreement?

In the world of procurement, a framework agreement is a form of procurement used to create an ‘umbrella’ agreement between one or more buyers and a single supplier or multiple suppliers. This framework sets out the terms and conditions under which goods, works or services can be purchased throughout the period of the agreement. These agreed terms generally include terms such as price, quality, quantities & timescales.

We explore what a framework agreement is in more detail below.

The Role of Framework Agreements in the Procurement Process

As mentioned above, a framework contract in public procurement is an agreement between two parties — buyers and suppliers — which establishes the terms governing contracts that may be awarded during the arrangement’s lifecycle.

A procurement framework covers the provision of goods, works, services, or a combination thereof. That said, for most procurements, a buyer is likely to have one ‘framework’ for each group.

Every time a buyer wants to procure a specific item or service under this framework agreement, a separate contract is established using a simplified ‘call off’ for which only suppliers on the framework may compete.

Why is a Framework Agreement not a Guarantee of Work?

A framework offers no guarantee of work to any supplier awarded a place on it, as it is an agreement put in place by a buying organisation or group of organisations about the terms and conditions that would apply to any order placed during the duration of the framework agreement contract. These orders are known as call offs.

Rather than a single major contract being awarded to a single supplier, there can be any number of call offs over the specified period, which only the suppliers on the framework may compete for.

The contracting authority can award these framework contracts to any of the suppliers on the framework agreement. But this means that even though a contractor has a place on the framework, there is a chance that they may not be awarded a call off contract at all during the framework agreement.

The Framework Agreement Procurement Method Benefits Buyer and Supplier

The procurement of goods and services through a framework agreement can help both suppliers and buyers in various ways.

Why Should Suppliers Bid for Places on Procurement Frameworks?

For suppliers that are already working with the public sector and would like to expand the opportunities available to them, winning a place on a framework agreement can help them participate in national and large collaborative procurements where the framework is often divided into specialist or geographical lots.

Although winning a place on a framework agreement is no guarantee of work, it can significantly enhance a supplier’s reputation and prestige, bringing smaller suppliers the opportunity to work with high-profile buyers.

Why do Buyers use Framework Agreements?

Framework agreements are also beneficial for the buying community because they can save contracting authorities from the need to issue repeated tenders for the same goods, works or services.

Often multiple buyers can use the same framework agreement, whether this is managed by one buying authority or by a specialist organisation such as YPO or Crown Commercial Service. This can lead to economies of scale, reduced administrative burden and consequent savings. It can also give buyers a chance to expand their pool of potential tenderers.

The Local Government Association believes that:

“Framework agreements continue to play a central role in public procurement, including enabling councils to work together through central purchasing bodies.”

Framework Agreements vs Dynamic Purchasing Systems (DPS)

Public sector organisations use framework agreements and dynamic purchasing systems (DPS) to procure goods, works and services.

The Differentiating Factor

Both methods are similar, with the main difference being that once a framework agreement has been closed at the end of the initial tendering process, suppliers cannot apply to join it until it reopens.

In contrast, new suppliers can apply to join a DPS at any point.

The Importance of Being on a Framework Agreement

One of the significant advantages that a framework agreement has over a DPS opportunity is that because a framework usually runs for four years, winning a place on a public sector framework means that a supplier can build a long-term relationship with the buying authority.

Missing out on a place on a framework, on the other hand, reduces a supplier’s ability to win business. Because of this, tracking these increasingly common arrangements is now essential for suppliers wanting to grow and expand.

Grow Your Business with Tendering Intelligence

Due to the growing number of purchasing bodies procuring services and goods through framework agreements, your business should be considering a business intelligence service that will support your search for framework opportunities.

Tracker Intelligence users can access the Framework Agreement and DPS modules to find opportunities to bid for in the public sector.

The Frameworks module supports early engagement and has several core benefits. The tool can support your team to:

  • Find new framework tendering notices for application
  • Research active and prior frameworks to better understand a buyer’s requirements
  • View call off notices and contract awards within an active framework
  • Discover which of your competitors may be on an active framework
  • Identify any supply chain opportunities with private sector contractors
  • Access related documents to gain further insight into requirements

Gain valuable insights with the right business intelligence. Using a tool like Tracker’s Framework Agreement module can prepare your organisation for when the framework will be tendered again and allow your business to begin the early engagement process.

Secure Your Place With Tracker Intelligence

We’ve answered the question of ‘What is a framework agreement?’, now see first-hand how Tracker Intelligence can support your business in the procurement process to win a place on a multi-supplier framework agreement.

Claim your free trial today to get the edge over your competition.

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