Procurement in a nutshell – multi-supplier arrangements

Framework agreements provide contracting authorities with a facility for procurement without creating an obligation either to purchase exclusively from a single supplier or to purchase a minimum quantity of products.

Multi-supplier frameworks

Framework agreements are dealt with in regulation 33 of the Public Contracts Regulations 2015 (PCR 2015). Contracting authorities can conclude a framework with a single provider or enter into a framework agreement relating to the same goods or services with more than one provider – a “multi-supplier framework”.

There are three types of multi-supplier arrangements under the PCR 2015. The focus of this note is those arrangements which do not set out all the terms of the arrangement and under which the contracting authority will determine the award of specific contracts through mini competitions.

Mini competition

The mini competition process allows the contracting authority to further refine its requirements whilst retaining the benefit of the collaborative agreement. Mini competitions are faster and less laborious than a full tender process and there is no need to advertise the requirement in the Official Journal of the European Union.

Although there are benefits to completing a mini competition, the process can be overwhelming. A common source of confusion is whether a contracting authority has to use the same award criteria at this stage as when the framework agreement was awarded.

Regulation 33(11) PCR 2015 requires that, following a mini competition, the contract must be awarded to the supplier that submits the best tender on the basis of the award criteria specified in the contract documents based on the framework.

The position in relation to proposed call-off criteria should therefore be made clear in the contracts made available to suppliers when the framework agreement is awarded.

The regulation stipulates certain other procedural requirements for the mini competition. Aside from these, the contracting authority is entitled to manage the process as it believes reasonable. Of course it must always have regard to the general obligations of equality, transparency and non-discrimination under procurement law.

Why is this important?

When procuring over a period of time, a framework agreement can deliver many benefits, such as reduced transaction costs and continuous improvement within long-term relationships.

One practical effect of a framework agreement is the freedom to award contracts without the need to re-advertise and re-apply the selection and award criteria. This alone will lead to all parties saving the substantial time and cost of repeat bidding.

Framework agreements are beneficial to contracting authorities wishing to develop a strategic relationship with the supply chain over a long period. This is particularly relevant to high-risk, high-spend construction programmes, often found in housing, education and highways.

It is important that frame-working is not seen as a convenient way of short cutting the procurement process. A contracting authority with any uncertainties as to the mini competition process should seek appropriate advice.

At worst, breach of the mini competition rules can amount to a ground of ineffectiveness under regulation 99 PCR 2015, which could prospectively cancel out any obligations under a contract that has been entered into. This is a risk that can and should be managed.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.