Framework agreements and DPS are not procurement procedures but commercial purchasing tools. These are, indeed, agreements between one or multiple local authorities and one or multiple suppliers. Frameworks and DPS should be the preferred commercial purchasing tool whenever a local authority is procuring off-the-shelf products, works or services that are generally available on the market. In these cases, it is advisable to search for an existing framework or DPS that can meet the requirement of the project before considering other procurement routes. Developing frameworks and DPS is a complicated and time-consuming process and hence finding suitable existing contracts is very advantageous to speed up the procurement process. Note that any public procurement should follow the basic rules and principles of procurement (Local Government Association, 2017; UK Government, 2022; Cabinet Office, 2020). The following sections go into more details about each of these types of contracts, their key features, and some advantages and disadvantages.

It is worth noting that there are specific terms and language around procurement and hence it may be useful to consult a glossary, for example London Borough of Richmond Upon Thames (2012)

Framework agreements

Overview

Frameworks are umbrella agreements between one or more contracting authorities which determine the terms and conditions, for things such as price and quantity, for contracts to be awarded during a given period. They effectively produce a list of approved suppliers for the buyer who applied as part of the tendering process. The minimum number of suppliers required on a framework is 2, down from 3 in previous years 

Frameworks are often used when buyers/providers have a need for particular products or services but there is uncertainty over specifics of the scope or the time period required. A framework significantly reduces the requirement of going through the tender process every time a job or service is required. The length of a framework is up to a maximum of 4 years and when established no new providers can be added to the framework during this period.

Frameworks are often split into individual lots, which are combinations of components of the contract for specific goods and services. A prospective supplier may have to apply separate tender responses to each lot that they are interested in. Once a framework is passed, individual contracts, called call-offs, are awarded throughout the project whenever a particular service or work is required. There are several processes through which a contract can be awarded. One such procedure is mini-competitions, in which suppliers quote for specific jobs with the cheapest quote being offered the job. This is often useful if it is difficult to directly identify a supplier who can offer the best value for money. It can take between 4 and 6 weeks to appoint a provider. Alternatively, contracts can be offered to the highest scoring supplier during the tendering process. If they cannot deliver, it is offered to the second highest scoring and so on until a supplier can deliver the work.

Advantages of framework agreements

There are several advantages to both suppliers and buyers from framework agreements:

For suppliers

✅ There is a possibility of being awarded multiple contracts from the same framework.

✅ They can help build the reputation of your business.

✅ There is a chance to build new working relationships and networks with multiple buyers.

✅ They reduce tendering costs.

For buyers

✅ Less downtime between identifying a need and fulfilling it.

✅ Increased network of potential buyers.

✅ Reduction in costs and inefficiencies from publishing multiple contracts for different goods and services.

✅ Potential savings with economies of scale.

Disadvantages of framework agreements

For suppliers

❌ Applying for a framework may require a lot of work and there is no guarantee that you will be selected as a provider.

❌ Even if you are successful in becoming an approved supplier on a framework, there is no guarantee you will be selected for any of the call-offs.

❌ Unsuccessful suppliers are unable to apply to any of the call-offs throughout the agreement period.

For buyers

❌ Frameworks are very complicated and so need to be well designed to be used properly. Proper due diligence is required in selecting or choosing a framework; see here [https://esc-dev-jira-01.atlassian.net/browse/LETP-558 ].

❌ There are gaps in the market for energy projects, especially for single technologies. Hence there may not be suitable frameworks for your needs.

❌ They may not always reduce the amount of procurement effort.

❌ Time saved in tendering generic work does not always translate to the best outcomes.

❌ Care is needed to avoid duplication and over-complication.

❌ Since frameworks are closed off for the duration of the contract, new suppliers with new solutions cannot be included.

Dynamic purchasing systems (DPS)

When there is a recurring requirement for a product, work or service a DPS is likely to be the most appropriate purchasing tool for a buyer. DPS are used for goods, services and works and are similar to frameworks but with the main differences being that new suppliers may join at any point during the duration of the notice. In addition, they are to be run completely electronically and the application process is simpler than that of a framework. DPS are restricted procedures, which means they are split into 2 stages: a selection stage and an awarding stage. The selection stage is open to any providers that meet the selection criteria and can be used to select and filter the initial applicants. In the awarding stage, all those selected in the first stage are invited to bid on the specific contract being advertised. Although originally there was a time limit of 4 years for a DPS, this no longer applies.

Since there are no limits on the number of suppliers who may join a DPS, this provides a large array of resources for the buyer, and when specific contracts are to be awarded the buyer invites anyone on the DPS to bid. This procedure can streamline the procurement process ensuring that buyers can quickly award contracts to appropriate suppliers. Since a DPS also allows new suppliers, unlike a framework agreement, new solutions or new market players can join to refresh the pool of resources. The procedure for a DPS is shown in Figure 1 below.

Figure 1: Scheme of electronic dynamic purchasing system (DPS). Source: Crown Commercial Service (2018).

Advantages of dynamic purchasing systems

✅ They enable new entrants into the market (subject to satisfying qualification criteria), which can offset the instability of losing suppliers and increases competition.

✅ Once live, suppliers can apply to the DPS at any time during the life of the contract, unlike a closed framework arrangement. Thus reapplication is possible.

✅ The procurement process is more streamlined for both buyers and suppliers, which in particular may help new or smaller providers, including small and medium enterprises. In particular there is a simplified application process for suppliers.

✅ They may provide cost savings to buyers through increased competition of suppliers.

✅ Some DPS can be divided into work stream categories and geographical locations, helping support local businesses.

✅ There is no limit on the number of providers allowed onto a DPS and hence buyers can select from a large group of suppliers.

✅ They provide an opportunity to stimulate markets.

✅ There are no restrictions on the duration of a DPS.

Disadvantages of dynamic purchasing systems

❌ Since there is a potentially large pool of suppliers, there is more competition and therefore a reduced chance of being chosen for a contract. Of course, this may be a positive for the buyer.

❌ As with framework agreements, being an approved supplier on a DPS doesn’t guarantee you will be awarded any work.

❌ Although DPS help simplify the procurement process, putting together a new DPS is a very complicated and drawn-out process.

❌ For those administrating the DPS there could be a large amount of work to managing the supplier and stakeholder engagement (Local Government Association, 2017).

❌ DPS cannot be used for direct awards since the tendering stage is the only stage where a decision can be made on value-for-money for each individual requirement (Crown Commercial Service, 2016).

Summary of differences between frameworks and DPS

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