The new Procurement Act might not have been designed specifically for SMEs, but it was definitely designed with SMEs in mind. The aim was to simplify the procurement process in the public sector for all suppliers and government buyers. Many changes favour small businesses and charitable enterprises, giving them a fair shot at participating in public sector procurement.
Framework agreements haven’t exactly been revolutionised, but the changes level the playing field so that small businesses and newbies to the public sector have the same chance of winning contracts as the larger, more experienced business operations.
We’re going to look at how frameworks have been adapted and why that is good news for SMEs.
Procurement Frameworks: Present & Future
Think of frameworks as umbrella agreements that contain several opportunities for suppliers to win mini-contracts; or, more exactly, individual purchases called “call-offs.”
They are designed to be an easy, efficient, and cost-effective way for public sector organisations to buy goods, works, and services from a pool of pre-approved suppliers.
They’re recommended for particularly large “normal” orders or for contracts that would otherwise need to be continually republished.
To start, there are …
2 Types of Framework Agreements
There are two types of frameworks and you need to be familiar with both if you want keep winning call-offs from your local authorities.
1) Single-supplier: Contracts are negotiated between public sector organisations and one supplier.
2) Multi-supplier: Mini-competitions between several suppliers determine who wins the call-off contract.
Now, we get to …
Frameworks Present
Currently (Aug 2024), frameworks are limited. Only pre-approved suppliers can be considered for a framework until the framework goes live. Once it’s live, the doors are closed. Doors open again when the framework expires.
Suppliers must be pre-approved before they can enter the supplier pool. They must meet the requirements pretty much to a T; for example, they must have the required experience and qualifications. They must also comply with the terms set out in the contract, as well as industry, national, and, if necessary, international regulations.
The lifespan is limited to four years.
Frameworks Future
Frameworks are still limited to a lifespan of four years but they can be extended up to eight years if necessary.
SMEs should know that the call-off process is a bit different. In most cases, suppliers participate in a mini-competition so the award goes to the best candidate. There are cases when public bodies can award the contract directly to a single supplier, but only under specific conditions.
Open frameworks
A big difference is the entry of open frameworks. This means that frameworks can be “reopened” so new suppliers can be added to the supplier pool at least twice over the framework’s duration.
This is great for SMEs because they have more opportunities to win contracts and gain experience in government procurement. There are additional opportunities for networking and connecting with other businesses in the industry.
An open competition is also great for contracting authorities because their projects are periodically refreshed with new innovative developments that benefit local and central government departments – and the public.
Transparency
There is also a move towards greater transparency in purchases. In many cases, this is covered by publishing new notices. For instance, buyers must publish an updated contract award notice after their final award decision. The difference between Present and Future is that now the notice must be published before call-offs are implemented (before work begins).
Publication of this notice (more or less) replaces the 8-day standstill period that typically follows a published contract award notice.
Dynamic Markets
It’s worth mentioning dynamic markets (DMs), which are a step up from dynamic purchasing systems (DPSs). They are very similar, for example, suppliers can join at any point during the framework’s lifespan, but there is one key difference that opens markets up to a more diverse range of contracts.
Dynamic purchasing systems are limited to off-the-shelf options; that’s the run-of-the-mill kind of thing, nothing different or bespoke.
Dynamic markets don’t have to run the mill. They are far more welcoming to all kinds of contracting authorities, especially public sector buyers who prioritise smooth-running and time-saving systems.
Understanding Frameworks in Public Procurement
Frameworks are forward facing because they set contract terms for transactions in the future. For example, call-off contracts between a buyer and specific supplier or suppliers could cover large purchases of cleaning materials over four years. Orders can be placed at any time during those four years without retendering – provided the terms and conditions remain the same.
If there are significant changes, the contract will have to be republished.
This results in massive time and cost savings on both sides of the contract. It provides a measure of predictability and the assurance of regular purchases.
Or does it?
Actually, it can provide those things, but not always. There is no rule that says contracting authorities must place orders of a certain value with the suppliers in their framework. This places suppliers on shaky ground because they can’t hang their financial health and success on one public sector buyer.
However, there is no rule that says they can’t put their eggs in different baskets. The situation can get sticky if they are awarded contracts on more than one framework at a time. This is why it’s so important to understand all the finer points of public sector framework agreements. You don’t want to be caught short or be in violation of any rules and regulations.
Advantages of Framework Agreements
Frameworks provide several advantages for SMEs and contracting authorities.
Let’s take a look.
1) Streamlined procurement process
This includes need identification, specs, tendering, and management and makes the process more efficient.
2) Established terms and conditions
Terms and conditions are defined at the beginning and used for the duration of the framework agreement.
3) Reduced admin
Fewer and shorter processes discard red tape.
4) Potential for long-term relationship building
Call-off contracts are relatively intimate because public sector bodies and suppliers can establish close working relationships over four (possibly eight) years.
5) Promote competition
Competition leads to innovation, development, and high-quality standards.
6) Cost-effective
This is in terms of economies of sale (discounts for scheduled or bulk buying) and is facilitated by close business relationships.
7) Compliance
Framework agreements ensure compliance with contract rules and industry regulations.
8) Transparency and accountability
Frameworks align with national and international directives regarding fairness, equality, and non-discriminatory public procurement practices.
On that note
The UK has left the EU, but it still maintains some regulations, standards, and directives for seamless procurement processes across European borders.
Get The Edge With S2G
Framework agreements can be a boon to SMEs vying for public sector procurement contracts. They remove many of the barriers that traditionally keep small businesses out of the market, for example, call-off contracts are often below threshold, making them more affordable and accessible than other public sector contracts.
To take full advantage of these opportunities, however, it’s important to understand three things:
- Process. Suppliers must understand all the stages of framework procurement processes and their nuances so they aren’t caught with their trousers around their ankles.
- Compliance. Suppliers must understand the laws and regulations governing framework agreements and public procurement in general, for example, legislation regarding anti-corruption and social inclusion.
- Strategy. Suppliers must understand how to develop winning tender submissions. This means leveraging every last detail and making them work double-time in your favour.
All of this is a lot to contend with and, let’s face it, who has the time for a deep dive when product development is at stake Supply2Gov has the experience and the expertise in the S2G market that enable you to find and win framework opportunities.
Register now and experience all the advantages that we bring to the table.