Public Sector organisations
that award a Framework Agreement for longer than four years or who award a
“Contract” rather than a Framework Agreement to circumvent the four-year limit
for awarding Agreements are generally in breach of Regulation 33 of The Public
Contracts Regulations 2015, if the reason for the award of the Framework
Agreement or Contract is out of the scope of the regulations.
It is considered good
commercial practice for the public sector to follow the obligations of the
private sector. However, there is no compulsion to follow the advice, as
commercial best practice dictates that an organisation’s Framework Agreements
and Contracts should be reviewed regularly to ensure financial resources are
used efficiently and effectively.
Framework Agreements and
Contracts awarded within the public sector are governed by Regulation 33 of The
Public Contracts Regulations 2015, which states that:
- 33—Framework Agreements.
- (1) Contracting authorities may
conclude framework agreements, provided that they apply the procedures
provided for in this Part.
- (2) In these regulations,
“framework agreement” means an agreement between one or more contracting
authorities and one or more economic operators, the purpose of which is to
establish the terms governing contracts to be awarded during a given
period, in particular with regard to price and, where appropriate, the
quantity envisaged.
- (3) The term of a framework
agreement shall not exceed four years, save in exceptional cases duly
justified, in particular by the subject matter of the framework agreement.
- (4) Contracts based on a framework
agreement shall be awarded in accordance with the procedures laid down in
this regulation.
Regulation 33 (4) states
that Contracts must be awarded following Regulation 33, which indirectly
disallows Contracts from being awarded for a period of longer than four years.
Contracts are typically
drawn from a Framework Agreement in the form of Purchase Orders, which define a
known value and volume of products or services to be purchased within a set
period. A Purchase Order and the Framework Agreement combined become a
separate and distinct Contract in its own right, meaning that several
contracts may be drawn from a Framework Agreement over its duration.
A Contract that does not
define a known and specific value and volume of products or services to be
purchased within a set period, even though designated and named as a
“Contract”, is merely a “Framework Agreement” by default and is not a Contract.
The Public Contracts
Regulations 2015 do allow Framework Agreements and Contracts to be awarded for
periods of longer than four years, but only in defined circumstances, such as:
- Within monopoly supply markets.
- Where markets have limited
Suppliers.
- For Capital Works projects that are
longer than four years.
- To allow Suppliers a return on
investment for capital equipment.
However, the Utilities
Contracts Regulations 2016, Concessions Contracts Regulations 2016 and the
Defence and Security Public Contracts Regulations 2011 generally allow for more
extended Agreements within each area of public procurement.
All UK public procurement
regulations are expected to be amalgamated into the “Procurement Bill”, due
mid-2024, which allows for eight-year Framework Agreements, with Suppliers
appointed to the Framework “refreshing” their rates utilising open competitive
procedures within the term of the Agreement. Only Suppliers with the most
competitive “refreshed” rates will be able to retain their position on the
Framework.
Additional
articles can be found at Business Law Made Easy. This site looks at business
legislation to assist organisations and people in increasing the quality,
efficiency, and effectiveness of their product and service supply to the
customers' delight. ©️ Business Law Made Easy. All rights reserved.
