Framework agreements — are you ready for the changes to procurement rules?

This is the second in a series of articles by international law firm Clyde & Co and global procurement leader Proxima. In this episode, David Hansom of Clyde & Co, and Susan Hilgers from Proxima, look at what changes are coming to framework agreements in the new Procurement Act

Framework agreements are popular in the UK procurement market. A framework agreement sets up an overarching set of contract terms and prices for a defined list of goods, works or services. Suppliers are appointed to the framework – which does not, in itself, typically guarantee any minimum levels of work, and then in-scope organisations “call off” from the framework based on the terms and prices already laid down. Under the current Public Contracts Regulations 2015 (PCR), a framework is generally capped at a 4-year maximum term (although call-off contracts can last longer), and bidders cannot offer to provide their services, etc. under the framework at higher prices than those which were offered at the start.

The new Procurement Bill (Chapter 4) evolves the rules on frameworks rather than starting with a completely new piece of paper. The current concept of a framework will continue (called a “closed framework” in the legislation) with a general 4-year maximum term (up to 8 years for defence or utilities). The bill also introduces the concept of an “open” framework, where any framework will be able to run for up to 8 years provided that it is re-opened for others to join at least once in the first 3 years. Existing suppliers can either stay on – provided they remain eligible – or re-bid with new pricing or commercial proposals.

It is envisaged that a framework will become more “dynamic” than the current position and practitioners are viewing the ability for existing suppliers to stay on the framework for longer than 4 years as a potential positive. If all bidders are able to re-bid at the first opening of the framework, in practice, contracting authorities could find themselves effectively running a whole new procurement and could potentially achieve the same result by running two consecutive framework agreements as now.

Practitioners are discussing how these new flexibilities can be used to get the best for them and their supply base. It has long been an issue that while frameworks undoubtedly create an efficient route to buy, they do “lock out” new suppliers or those expanding their portfolio of offerings for the framework term, so buyers are looking to understand how the new reforms will provide flexibility and a potential solution for that.

How you can prepare now

For buyers:

Consider your procurement pipeline to identify which frameworks you have, expiry dates and start to think where open frameworks might work well for you and your suppliers.  If you haven’t got a pipeline you should be working on that now ready for the new transparency requirements arising from the bill, the Government have issued a helpful overview of their vision and ambition for transparency and how that was translated in practical terms in the Bill, take a look: Transforming Public Procurement - Our transparency ambition `ce.gov.uk)

  • Identify what is working well on the current framework, what is working less well, and think early about lotting and division of work into geography, work type or other structure.
  • Engage with stakeholders early on in the design of any new framework – especially if you are trying something new for the first time.

For suppliers:

  • Understand what frameworks you are on and the expiry dates (look out for options to extend)
  • Engage in any soft market testing on replacement frameworks which may be run by the customer.
  • Make sure you understand the rules of how open and closed frameworks will work in practice.

This series of updates has been prepared by international law firm Clyde & Co in partnership with world-leading procurement and supply chain consultancy Proxima.

For more information or advice, please contact David Hansom, Clyde & Co or Simon Payne at Proxima.

 

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