Securing a place on a framework, or being a preferred supply partner, can offer a multitude of benefits to both a buyer and a supplier.
We explore the advantages and disadvantages, whilst explaining what a framework agreement is and how you can find these lucrative opportunities.
What is a framework agreement?
A framework agreement is a type of contract that is commonly used as a multi supplier agreement, establishing a long term relationship to deliver works as an approved supplier for the buyer.
For example, a Council has a range of works to be completed by a group of suppliers, contractors or service providers. Setting up a framework agreement will be an efficient way to work, without having to go through the tender process each time.
Similar to a tender for a contract, the framework tender is usually a mix of quality and price. The buyer will then review all framework bids and approve a specific number of bidders to be awarded a place on the framework.
Then, when the buyer has a requirement or specific project, they will usually run a mini competition or call off, which reduces the timescales and complexity of awarding specific works.
Alternatively, some frameworks allow a direct award, so no mini competition or call offs. Work could be awarded to a bidder based on a geographical lot which has already been agreed as part of the framework agreement. Some frameworks also award based on performance, which will be measured throughout the partnership.
Advantages of a framework agreement
From the bidder/suppliers perspective;
A framework agreement is a great way to work with public sector bodies. Once approved and EU compliant, it can hold credence to secure future public sector work, both via a framework and individual project contract.
It can help nourish a long term partnership with the buyer, and potentially other similar buyers.
Depending on the framework agreement, if estimated values of work are known, they can provide a healthy long term revenue stream for a business, supporting cash flow and business planning for 3-5 years.
From the buyers perspective;
The reduction of going through a tender process for each individual aspect of work can offer significant benefits for the buyer. This includes; administration time and costs, potential discounts and savings from suppliers, a more defined and planned approach and trusted expert partners.
Disadvantages of a framework agreement
From the bidder/suppliers perspective;
Many bidders will invest time and costs to be awarded onto a framework and then potentially not receive any work through them. So, first of all it is important to weigh up or discuss with the buyer how much work is likely to be going through the framework. If it is a renewal of a framework, you can review how the partnership has been over the last 4 years.
Once awarded a place on a framework, you can’t just wait or expect the phone to ring. You still need to work hard, to get your share of it! This may involve networking at organised events for suppliers, or traditional sales and marketing – but the benefit being, you are already approved to work with them. If, or when, the phone does ring there can often be a short window of time to turn the project around, this can sometimes be exhausting on business resources.
From the buyers perspective;
A framework agreement is a long term partnership, as such this can sometimes be challenging to manage.
It can also provide restrictions to new suppliers who may offer innovative, new, solutions with the changing and evolving nature of technologies for example.
What’s the difference between a framework agreement and a contract?
A framework agreement rarely provides any specific commitment in terms of project and value of works that you have won/secured. It is more focused around being an approved supplier, allowing you to be awarded work during the period the agreement lasts.
On the other hand, a contract is usually a specific fee, with project scope and timelines allowing you to quote and tailor your product/service for the specific job at hand.
Is a framework agreement legally binding?
It is a legally binding contract in terms of the bidder carrying out the works in line with the agreed terms and conditions documented.
A framework usually provides a guide of how much work, and the value, they expect to run through the framework agreement. However, it rarely provides a commitment to this.
How long can a framework be?
Typically, a framework agreement lasts for 4 years. However, this is determined by the buyer. They can range between 2-10 years.
Is a framework agreement different across sectors/industries?
For example, Public Sector framework agreements or Construction framework agreements?
They can be slightly different depending on the sector and service, however the same rules apply across the board.
How buyers award work can also vary depending on what the framework is for. For example a service based opportunity may prove difficult to allow a direct award, so the framework would need to be set up to allow for mini competitions, whereas a product may be offered via a direct award.All UK public sector frameworks will be in-line with the OJEU procurement threshold. This allows every relevant business the opportunity to bid to be on the framework and be a preferred supplier.
Where to find framework opportunities?We have a purpose built software, Tender Pipeline, that features all public and private framework agreement opportunities. You can quickly and easily search for opportunities and sign up to receive relevant alerts, supporting you to be well prepared in advance.
As mentioned above, framework agreements can last for anything between 2-10 years so it is important that you stay up to date and are aware of future opportunities at the earliest stage to ensure you don’t miss a significant opportunity.
Frameworks can be set up by a specific buyer, for example a University focused only for their specific use. Others are broader such as ESPO, Yorkshire Purchasing Organisation, Crown Commercial Services, Procurement for Housing etc. These will set up frameworks for their members, which may be groups of housing associations or schools, for example. So once approved and successfully awarded onto their framework you will receive mini competitions and therefore have access to a much larger group of clients.
How to secure a framework agreement
You should approach a framework as any other tender or contract opportunity. You should invest time and resources to fully understand it, including what the buyer wants and expects, appreciate your competitors strengths and weaknesses, and how you can seek competitive advantage.
We also advise to consider what compliance elements may be required so that you can plan for them. For example; what training will your staff need? Does the business need additional certifications? What experience and evidence is relevant and can you start planning for it, prior to the tender being advertised. Planning is key!
If you require additional advice, or bid writing services contact one of our experts today and discuss your requirements.