For all industries, framework agreements play a vital role in establishing fruitful collaborations between suppliers and public sector buyers. However, navigating the intricacies of these agreements can often be challenging, especially with the jargon and technicalities involved.
That's why we've crafted this comprehensive guide specifically for suppliers, aiming to demystify framework agreements without overwhelming you with unnecessary jargon. By gaining a clear understanding of framework agreements and their benefits, you'll be better equipped to seize the opportunities they present.
Understanding framework agreements
A framework agreement is a contractual arrangement commonly used to establish a long-term relationship between a public sector buyer and multiple suppliers, contractors, or service providers.
It enables the buyer to efficiently manage a range of works without having to go through the tender process each time. The framework tender, similar to a contract tender, typically evaluates both quality and price.
The buyer reviews all framework bids and selects a specific number of bidders to be awarded a place on the framework. When the buyer has a specific project or requirement, they can either run a mini competition or directly award the work based on geographical lots or performance metrics outlined in the framework agreement.
Pros and cons of framework agreements
Commonly confused with Dynamic Purchasing Systems (DPS), framework agreements offer many pros to SMEs looking to expand their brand recognition and potential for contract award. However, it is equally important to be aware of the cons that some SMEs may experience during this process.
Pros of Frameworks | Pros of DPS |
Simplified procurement process: Frameworks provide a streamlined procurement process for suppliers. Once pre-qualified and selected for the Framework, suppliers can participate in subsequent procurement exercises without undergoing repetitive qualification procedures. This simplification saves time and effort, allowing suppliers to focus on submitting competitive bids and delivering quality goods or services. | Ongoing business opportunities: DPS offer continuous business opportunities for suppliers. Unlike Frameworks that have fixed submission deadlines, DPS allows suppliers to submit tenders at any time during the system's duration. This ongoing access to procurement exercises increases the chances of securing contracts and provides a steady stream of business opportunities for suppliers. |
Access to a ready market: Suppliers awarded Framework placement can gain access to a ready market of potential buyers. Being part of a Framework increases visibility and the opportunity to secure contracts from multiple organisations within the Framework. This broader market exposure can lead to increased business opportunities and revenue potential for suppliers. | Reduced competition pressure: DPS typically attract a larger pool of suppliers compared to traditional procurement methods. However, unlike a one-time tender where all suppliers compete simultaneously, DPS allow suppliers to submit tenders independently as and when they are ready. This reduces the direct competition pressure from other suppliers, giving each supplier a fair chance to present their offerings. |
Reduced marketing costs: Inclusion in a Framework reduces the need for extensive marketing efforts by suppliers. Instead of individually targeting multiple buyers, suppliers can concentrate their marketing resources on the Framework itself. This concentration can lead to overall cost savings and more efficient use of your marketing budget. | Flexibility in tender submission: Suppliers participating in DPS have flexibility in tender submission. They can submit tenders for specific requirements as they arise or selectively bid on projects that align with their capabilities and capacity. This flexibility allows suppliers to prioritise their efforts and resources, focusing on the most suitable opportunities, which can enhance efficiency and improve chances of success. |
For a full and detailed walkthrough of the pros and cons of framework agreements versus DPS, check out our dedicated blog.
Key elements of a framework agreement
To effectively navigate framework agreements, all suppliers must familiarise themselves with the essential components that shape these agreements. These key elements include:
The scope of goods or services covered
Specifying the extent of the supplier's responsibilities
The duration and termination clauses that outline the agreement's timeframe and conditions for early termination
The opportunity pricing and payment terms that define how the supplier will be compensated
Any quality standards and performance metrics that will establish the expected level of performance and monitoring mechanisms
The dispute resolution and governance mechanisms to address procedures for resolving conflicts and maintaining a transparent and fair relationship between the supplier and the buyer
Navigating the jargon: understanding the common terms used in a framework agreement
Framework agreements, while beneficial for suppliers, often come with a host of industry-specific terms and jargon. However, gaining familiarity with these terms is essential for effective communication and collaboration with buyers. By understanding these common terms, suppliers can confidently navigate the intricacies of framework agreements.
Let's delve into some key terms and their significance:
Call-off orders or mini-competitions: These terms refer to the process of awarding specific works within the framework. Instead of going through a lengthy tender process, the buyer can initiate a call-off order or mini-competition to select a supplier from the pre-approved list within the framework. It streamlines the procurement process, reduces administrative burden, and expedites the awarding of specific works.
Eligibility criteria and supplier selection: Framework agreements typically have specific eligibility criteria that suppliers must meet to participate. These criteria may include financial stability, technical expertise, quality standards, or specific certifications. Supplier selection involves the evaluation of supplier proposals based on these criteria. By understanding the eligibility requirements and selection process, suppliers can align their capabilities and offerings to increase their chances of being selected.
Framework refresh and re-tendering: Framework agreements have a predetermined duration, often ranging from a few years. After this period, the agreement may undergo a framework refresh or re-tendering process. During a refresh, the buyer evaluates the framework's performance, revises terms and conditions if necessary, and may invite new suppliers to participate.
Re-tendering involves the complete renewal of the framework agreement through a competitive tendering process. Suppliers should stay informed about refresh cycles and be prepared to engage in re-tendering to maintain their position within the framework.
Pricing mechanisms: Framework agreements employ various pricing mechanisms to determine how suppliers will be compensated for their goods or services. Common pricing mechanisms include fixed pricing, where a predetermined price is established for specific items or services, and rate cards, which outline predefined rates for different categories.
Discounts may also be applicable based on volume or other factors. Understanding these pricing mechanisms enables suppliers to structure their pricing strategies effectively and maintain profitability.
Key Performance Indicators (KPIs) and Service Level Agreements (SLAs): KPIs are performance metrics used to assess a supplier's performance within the framework agreement. They can include metrics such as delivery time, quality standards, customer satisfaction, or any other measurable indicators.
SLAs, on the other hand, define the agreed-upon levels of service that the supplier is expected to meet. Suppliers must have a clear understanding of the KPIs and SLAs outlined in the framework agreement to ensure they can consistently meet or exceed the buyer's expectations.
How Thornton & Lowe can help you understand frameworks jargon
We know that our clients have what it takes to win, and we champion the SMEs that make it happen. With a success rate of 75% and 90% client retention, get in touch and let us be the voice that helps you to navigate the framework procurement process today!
