In the world of procurement, a framework agreement is a form of procurement used to create an “umbrella” agreement with supplier(s).
This framework sets out the terms and conditions under which goods, lots or services can be purchased throughout the period of the agreement. This will include terms such as price, quality, quantities and timescales.
We explore what a framework agreement is below.
Framework agreements explained
A mentioned above, a framework is an agreement between buyers and suppliers which establishes the terms under which contracts that may be awarded during the contract’s lifecycle. A framework covers the provision of goods, works or services, or in some cases a combination. That said, for most procurements, a buyer is likely to have one ‘framework’ for each group.
Framework agreement not a guarantee of work
Keep in mind that a framework offers no guarantee of work to any supplier winning 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. 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 should suppliers bid for places on framework agreements?
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 suppliers to 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, and can bring smaller suppliers the opportunity to work with high-profile buyers.
Why do buyers use framework agreements?
Frameworks are also beneficial for the buying community; 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, as well as giving 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 both framework agreements and dynamic purchasing systems to procure goods, works and services.
Both methods are similar, with the main difference being that once a framework 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.
As 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 while missing out on a place on a framework reduces a supplier’s ability to win business, so tracking these increasingly common arrangements is now essential.
Grow your business with 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 users can access both the Framework Agreement and DPS modules to find opportunities 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 notices for application
- Research active and prior frameworks to better understand a buyer’s requirements
- View call-off notices and 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 insight with business intelligence. Using a tool like Tracker’s Framework Agreement module can prepare your organisation for when the framework will be tendered again and will allow your business to begin the early engagement process.
See first hand how Tracker can support your business in winning more opportunities in the public sector. Claim your free trial with one of our procurement experts today.
Feb 10, 2020.