Construction firms call for framework cull

Construction firms are apparently unhappy with the multitude of framework agreements proliferating in the country. In their view it adds costs to the contractors businesses and suggest a ‘clearing house’ to avoid ‘unfair and overlapping’ frameworks.

It is interesting to consider the implications of this suggestion. It is true that more frameworks increase the costs an the difficulty for firms to be present in all of them, that is pretty much obvious, but let’s look at the flip side. If the number of frameworks was drastically reduced and if the remaining lasted for the usual 3/4 years without any sort of overlaps what would that do to the market?

Well, whomever got into any given framework would have 3/4 years to milk the clients and the market would be foreclosed for that period. Plus, it would make life incredibly easy for any companies wanting to set up (or maintain) a cartel. And in four years there would be no competitors left to challenge for the next framework anyway.

Perfect for the purposes stated in the final paragraph: “Now is the time to revisit this work to secure better outcomes for customers and a more sustainable industry.”

At least they’re honest.

Links I Liked [Public Procurement]

1. There's an "official" English translation of the Danish public procurement law. This reminds me of a project idea I had a couple of months ago of translating into English a number of very different public procurement laws. Thanks Carina for the heads up.

2. Court of Auditors publishes Special report no 17/2016: The EU institutions can do more to facilitate access to their public procurement.

3. A public works cartel is found out in Spain (Spanish only).

4. Change rules around public contracts to let charities compete fairly, Big Society Capital tells government. For once, the proposed headline changes are reasonable and are not what we usually see from vested interests (ie, tilt the playing field in my favour). Having said that, "prior market engagement" gives me shivers. Report itself can be found here.

5. Single-Supplier Framework In London – Guaranteeing Value Will Not Be Easy. Agreed. My views on framework agreements in general are bearish and especially single supplier ones.

Links I Liked [Public Procurement]

1. Why is so much ICT procurement not appearing on ContractsFinder? SpendMatters reports on some research carried out by Innopsis on this topic. The smoking gun - which I agree with - is framework agreements. As argued here before, framework agreements are a black hole in what concerns contract data.

2. MOD publishes a refreshed SME policy.

3. The Public Contracts Regulations 2015 has been amended by the Public Procurement (Amendments, Repeals and Revocations) 2016. Great to see the that section 1 no longer refers to the Europe 2012 strategy, but one has to wonder - again - why the rush to ge tthe PCR2015 out the door in February last year.

4. Slovenia reforms its public procurement law, right before the deadline to transpose Directive 2014/24/EU.

5. Not all is good in Bulgarian public procurement. Further examples here.

Public tenders are not like milk: some thoughts on Case T-553/13 (tender validity)

The General Court decided recently Case T-553/13, European Dynamics Luxembourg and Evropaïki Dynamiki v Joint undertaking Fusion for Energy, EU:T:2015:918. Albert wrote about it in detail here. Although the case pertained to a cascade framework agreement, unfortunately, the crux of the matter was not the cascade style framework in itself - which the applicant did not question - but only incidental issues raised by the applicant. These three issues were:

1. Alleged violation of the principle of non-discrimination and equal treatment

2. Alleged breach of obligation to give reasons for exclusion

3. Damages

The Court dismissed all three claims as baseless with very straightforward arguments. I found particularly ironic that most of the case law cited referred to previous cases brought forward by Evropaïki Dynamiki (seriously). Out of the three claims, the most ludicrous was perhaps the first, with the applicant claiming that evaluating tenders beyond their validity breached the principle of non-discrimination and equal treatment. Yes, because like with milk, tenders apparently go bad after the "best before date".

The General Court found that the obligation to keep a tender valid for a certain period of time only binds the tenderer, not the contracting authority. There is not much to comment here other than this was perfectly obvious to anyone. Having said that, there is something to be asked about the duration of tender assessments overall and how they fit for example, with the principle of good administration and eventually, proportionality. Is it proportional that only one party is to be bound by this obligation? What about the opportunity costs imposed on all participants of not knowing if they have won the contract/got into the framework? But the claimant does not appear to have explored these legal arguments in full.

As Albert argues, the (unadressed) elephant in the room was the cascade style framework agreement model in itself. Under this model, the tenderer with the best tender gets "first dibs" on potential contracts without competition being re-opened. The first question to raise here is the possibility of these arrangements facilitating collusion among the few economic operators admitted to the framework. The second issue is the "crystallisation" of a certain competitive panorama which may be truthful in the moment the framework is established but have zero correspondence with reality further down the line. In consequence, as the tenders (in this case) were fixed for 60 days after the framework was set, what would happen if the economic operator with the best tender decided to change the conditions (either raising price or lowering quality for example)?

It may be that this particular framework included provisions catering to these risks (especially the last one), but then maybe it did not.

PS: As I was busy finishing my Ph.D in the Summer of 2010 I saw a F4E job advert asking for someone with experience dealing with competitive dialogue. By the time I saw the advert, the position had closed three hours before. Dang.

Links I Liked [Public Procurement]

1. Scotland wants to use public procurement to find good employers. Peter Smith thinks this is a flawed approach and I am inclined to agree. It never ceases to amaze me, Government's desire (and ability) to bend procurement to achieve goals not connected with its core function.

2. DIGIWHIST project makes some bold claims about corruption in public procurement in English local councils. The full report by Mihaly Fazekas is here. My interview with him can be found at the Public Procurement Podcast.

3. Apprentice requirements in public procurement have hidden costs for bidders and make life more difficult for SMEs. Shocker! If someone can point me towards where proponents of these and similar measures haver their free lunches, please get in touch.

4. King's College is organising a one day workshop about convergence in transatlantic procurement markets on October 26th. Programme looks great.

5. Albert comments on Case T-299/11 by the General Court where compensation for loss of opportunity was granted to an aggrieved bidder on a framework agreement. Very interesting case and one of the first where we see a court looking into the messy inside of framework agreements.

6. Rome Tor Vergata is running a International Executive Week in Procurement Management next January.

PS: Apologies for the slow movement here on the blog but term has started. I hope to have a little bit more time and mental bandwidth over the next few weeks.

Links I Liked [Public Procurement]

1. One more PPP episode is out. This time with Marta Andrecka from Aarhus University where we talk at length about framework agreements and how they are being used in the UK and Denmark. This is episode 8 of 20 and as usual, many thanks to the British Academy Rising Star Engagement Award for making it possible. By the way, the 2016 call is now open.

2. Albert fired a broadside against my arguments in favour of public contract registries. He remains unconvinced by my arguments and has provide further food for thought. I need a few days to prepare my re-rebuttal, but my argument of price arbitrage does not refer to a single price only for each good/service being acquired (which is impossible to achieve in public procurement) but to a reduction in the current arbitrage levels enabled by the lack of price transparency. In other words, whereas achieving the single price is impossible, extracting more efficiency by reducing arbitrage does not look to me as farfetched.

3. Navarra regional Government has a plan (in Spanish). To help SMEs that is. You will see nothing but good words on my part about standardisation of procedures as long as they are done by the minimum common denominator (i.e., basic) instead of full of complexity as it appears to be the traditional approach. On the negative side, Navarra claims that environmental and social policies will help SMEs and my money is on the opposite: the more complexity that is introduced into a system the more difficult life is for smaller companies.

4. Why Can't Startup Companies Get US Government Contracts? Another of my pet peeves. Great to see an outlet like VICE covering procurement. Directly connected with one my next research projects.

5. How the car industry hid its software behind the DMCA. Not directly about procurement, but ever more relevant and cautionary as more and more software permeates goods and services bought by public bodies. I partially regret having pushed so hard against IP staying in the public sector hands in the run up to Directive 2014/24/EU. Blogpost on this should follow on the next couple of days. More here.

Links I Liked [Public Procurement]

1. Italian MOD moves from Microsoft Office to LibreOffice. Very interesting move, particularly taking into account we are talking about a Ministry of Defense. After a few (maybe one) success story with Munich, LibreOffice has not really been able to get a foothold in the public sector.

2. Banks love the blockchain. Maybe I should get cracking with a research project looking into how we can use the blockchain in public procurement. Any takers?

3. Could the public sector keep its services but save millions by using smaller consultancies? Speculative, but good point made by the authors about what 18F in the US has done with CALC. The more price transparency exists in public procurement, the more difficult it will be for companies to profit from arbitrage.

4. Sally Collier goes on the record that she wants Government to move away from frameworks. I think these are excellent news. Let's hope the CCS delivers on this.

5. Denmark and Smart Cities. As always, I am sucker for these stories...

Public Contracts Regulations 2015 - Regulation 103

Regulation 103 - Ineffectiveness etc. in relation to specific contracts based on a framework agreement

This Regulation defines rules that are applicable only to contracts tendered via a framework agreement. As in other regulations, this one starts with a definition, in this case of "specific contract" - any contract based on a framework and entered into before a declaration of ineffectiveness was made in relation to the framework agreement itself.

If a declaration of ineffectiveness is produced against the framework, contracts that have already been entered into are not affected automatically. The Regulation is very assertive in the way that the declarations of ineffectiveness may be produced.  There are only two ways to do so. As a first (paragraphs 3 to 5), the Court must declare  a claim must be brought against it within the time limits of Regulation 93 even if done so outside the action brought against the framework. This reference to the time limits of Regulation 93 is crucial as even in the most generous scenario, the action needs to be brought within 6 months of the contract being entered into. In a country with a tradition for longwinded contracts, this is an important limitation. Additionally, the exceptions of Regulation 100 also apply here, so there may be grounds to avoid declaring ineffective a contract tendered via a framework agreement.  Regulation 101 is also applicable (consequences of ineffectiveness) but there is no requirement to impose a financial penalty under Regulation 102(1), which makes sense assuming that the ineffectiveness of the framework agreement led to it.

Under this "ground for ineffectiveness" in case the Court decided no to declare the ineffectiveness of a specific contract due to the rules of paragraph 5, the contract may be shortened instead under paragraph s 9, 10 and 11. While paragraph 9 says "must be shortened" instead of "may be shortened", paragraph 10 leaves it to the discretion of the Court if contract is to shortened at all. According to this paragraph, the maximum extent that the contract may be shortened to depends on what the Court considers to be possible bearing into consideration the overriding reason that was used to forestall the declaration of ineffectiveness in the first place.

As an alternative possibility, this Regulation only allows for declarations of ineffectiveness against contracts specifically on the second (partially) and third grounds of ineffectiveness of Regulations 99, that is paragraphs (5)(6)(7).

Public Contracts Regulations 2015 - Regulation 34

Regulation 34 - Dynamic purchasing systems

Regulation 34 transposes to England and Wales the rules contained in Article 34 of Directive 2014/24/EU on dynamic purchasing systems. Dynamic purchasing systems constitute another type of two-stage "system" for awarding contracts the other being the framework agreements we discussed yesterday. The major difference between a dynamic purchasing system and a framework agreement is the freedom with which suppliers can enter the first at any time, whereas in the second, suppliers are admitted only at the start. Up to this moment, framework agreements are by far more popular, particularly in the UK.

Albert has already given a fantastic overview of dynamic purchasing systems and how they are supposed to operate, so I will focus my commentary in a couple of more specific points: the need to use the restricted procedure, its electronic nature, the need to invite all participating tenderers and speculating why it has not been used more widely.

1. The need to use the restricted procedure

Regulation 34(5) establishes the obligation to adopt the restricted procedure with the necessary adaptations to undertake procurement of contracts under dynamic purchasing systems (DPS). This can be interpreted in two different ways: the first that for establishing the DPS a restricted procedure of sorts needs to be followed. The second, that the call offs themselves need to follow a restricted procedure. An interpretation by analogy with framework agreements would indicate that the first interpretation is right (and I suspect that is the most common one), but I struggle to make it compatible with the actual wording of paragraph 5 "In order to procure under a dynamic purchasing system, contracting authorities shall follow the rules of the restricted procedure[...]." (emphasis mine) The killer word for me is "procure".  Neither the Directive nor the Regulations used "establish", which would emphasise the creation of the system, but the actual procurement being undertaken.

Paragraph 6 however refers to the selection of candidates to be admitted to the system, moving the discussion back to the system creation in itself. However, there is another clincher in this discussion: although participation limits are a key feature of the restricted procedure, there are no limits to the numbers of candidates that can participate in a DPS. As such, even though the Regulations state that a restricted procedure needs to be followed, in effect the defining element of that procedure (limitation of candidates) is actually not present at all.

Would it not have been preferable no refer to the open procedure instead? The reference could limited to the traditional open procedure, ie the one with a selection/qualification stage for all participants. The irony of course is that Regulation 20 of the Public Contracts Regulations 2006 made reference to said procedure instead...

2. Electronic nature

Another key feature of the DPS is that it needs to be done entirely electronically. It makes sense: the logic underlying DPS is to allow for common repetitive spend to be done with reduced transaction costs for everyone involved. Although e-procurement is widespread in the UK it is not yet mandatory nor are all contracting authorities geared up to use it. It may be that in the coming years as procurement officers become more comfortable with e-procurement, better tools are made available and the relentless pressure to reduce transaction costs applied may lead contracting authorities to adopt this procedure more widely.

3. The need to invite all tenderers

In a DPS, all admitted tenderers are to be invited to take part in every call off for contracts that they have been qualified for (the DPS can be divided into lots/areas). This is a clear difference from multi-supplier framework agreements where effectively contracting authorities have free reign to invite whomever they feel like for any specific contract. If some practices such as "cherry picking" participants (pun intended), rotating opportunities or effectively always using the same supplier are compatible with the principles of equal treatment/non-discrimination and competition, that is a different matter.

But this change is a nice segway for the section on why DPS are no more popular in the UK and eventually elsewhere.

4. DPS lack of popularity

Over the last decade, framework agreements have been used a lot more widely than DPS in European public procurement. One reason for this state of affairs may be that all participating suppliers must be invited all the time. Experience tells us that contracting authorities (particularly in the UK) do not like to receive lots of bids or even to have the risk that multiple bids are submitted. Over the years we have seen plenty of practices with this objective in mind such as charging for tender documents, detailed PQQs or establishing high turnover requirements: the objective of all was to raise barriers to supplier participation. Therefore, under this light the DPS is a lot less compelling than a framework agreement for a contracting authority as the latter "allows" for more fine-grained controls.

The second potential reason is mentioned by Abby Semple in her new book (para 3.50): DPS have higher administration costs than framework agreements. This is due to another key difference between both, as in the DPS suppliers can apply to join at any time during the lifetime of the system. In consequence, contracting authorities must have someone responsible for reviewing the requests periodically and as mentioned by Albert, the deadlines for admissions are only 10 working days, a very short time window for public administration in general. Each admission does not need to incur in a lot of work, but is certainly more burdensome (yet another task to keep track of) than simply "setting and forgetting" as can be done with framework agreements. In addition, DPS traditionally required a number of notices to be sent for official publication. Those have now been reduced and could easily be automated with the right systems in place.

The third reason is the mandatory use of electronic means. This was already present in the Public Contracts Regulations 2006, so it is not unfathomable to consider that if most contracting authorities are not e-procurement experts today, they certainly were not in 2006. At least in other Member States like Portugal where framework agreement is incipient and e-procurement mandatory for all contracts, I suspect this will not be seen as a hindrance for DPS take up.

The final reason I can think of is the competition with framework agreements. Both can be used for pretty much the same areas/contracts, so they compete with one another for "market share." It is  clear to me that from the eyes of a contracting authority, framework agreements have a number of benefits in comparison with DPS. And as procurement officers are not measured on the impact they have on the market or respect for the principle of competition...

I would add a final note that there is so much experience in the UK using framework agreements (and they are an accepted practice) that I see it difficult for contracting authorities to change wholesale in the UK, particularly if there is no guidance or a clear policy giving them preferential status over framework agreements.


Public Contracts Regulations 2015 - Regulation 33

Regulation 33 - Framework agreements

In Regulation 33 we can find the rules applicable to framework agreements. This Regulation transposes Article 33 of Directive 2014/24/EU. Regulation 33 also starts the section on "Techniques and Instruments for Electronic and Aggregated Procurement". How exciting!

Framework agreements have become remarkably popular in the UK over the last few years and I have already covered some of their problems before. Albert had a lot to say today about competition (scathing, scathing!) and this is an area of intense interest for me in terms of research opportunities in the future.

For creation of a framework agreement, contracting authorities can use any procurement procedure included in part 1, thus meaning that they can even use the negotiated procedure assuming there was a benefit in doing so. One of most interesting uses of framework agreements I have seen over the last few years was done by the FiredUP project, where a competitive dialogue was used to create a framework agreement. Abby Semple gets full credit for that work.

Framework agreements can either be single or multi-supplier, with different rules for each type. Rules for the first are contained in paragraph 7 and state that any subsequent contracts must respect the limits set by the framework and that the operator may be consulted to supplement its tender if needed. One of the problems with these rules is that due to the lack of transparency after the institution of a framework it is nay impossible to know if these rules are being complied with.

Multi-supplier rules can be found in paragraph 8 and are divided into three sets: i) without reopening competition; ii) by partly reopening competition; iii) by completely reopening competition.

Contracts can be awarded without reopening competition if the terms and conditions of the framework agreement were detailed enough and in an objective manner in the procurement documents leading to framework agreement. The litmus test is thus: do the suppliers need any extra information to be able to perform the contract and does the contract authority has enough information from them, or more is needed?

Even if the framework agreement sets out all the necessary terms for awarding subsequent contracts, contracting authorities can still reopen competition if such possibility was mentioned in the procurement documents.

Finally, in case the terms governing the framework are not detailed enough, then the contracting authority is entitled to reopen competition within the framework to award subsequent contracts.

Issues with framework agreements

Framework agreements have a number of issues associated with them in my view: duration, market foreclosure, lack of transparency and collusion. I will focus on the first three and redirect you to Albert's excellent tirade on the last.

The first issue I see with framework agreements is their duration. According to Regulation 33, framework agreements can last for 4 years, which seems like a reasonable duration until it is obvious that the limitation is for the framework agreement in itself and not the subsequent contracts. In other words, it is possible for contracts to extend long after the supposed 4 year deadline. And as the UK does not have a 3 year limitation for the starting term of a contract as other Member States do, I have a feeling they can last for long. If they should last for long is another question, my view is that they should not (they should be called every year to reduce market foreclosure, collusion and keep suppliers on their toes).

The second issue is market foreclosure. This is particular important as the use of framework agreements is on the rise in the UK. Framework agreements may have a market foreclosure by restricting access to billions of pounds worth of spend every year to the few suppliers which are admitted to them. Now multiply that for at least four years and the potential effect is quite big. In my view, framework agreements represent the opposite of what procurement rules were originally designed for: transparency and opening the internal market.

The third problem is lack of transparency. Framework agreement proponents argue that they are subject to transparency, procurement rules and principles in their creation stage. They are right, but to a point. The problem is that by then not a single penny has been spent yet. So effectively transparency only applies to a "pre-award stage". Imagine that we apply the same standard to the open procedure: we would get transparency for a PIN notice or a selection stage, but no transparency whatsoever for the award stage. Would we say that the the principle of transparency had been served well then?

Lack of transparency has other pernicious effects. It is pretty much impossible to know what happens on a framework agreement once it is set in place. How are the calloffs done? How often are they done? What has changed from the original documents of the framework agreement? How many contracts have been awarded? How much money was spent via said contracts? I am not arguing that all practice is bad, but the lack of transparency ensures that is impossible to answer those questions and others.

Framework agreements are information black holes: we know they exist, they attract a lot of attention, but nothing ever leaks out.

Links I liked [Public Procurement]

Apologies for the momentary lapse in the running Public Contracts Regulations running commentary as I have been battling a stomach bug and spent 12 hours travelling today. Normal service resumes tomorrow. In the meanwhile enjoy the following procurement links:

- Crown Commercial Service Backs Down on Consulting Price Cuts

- Flawed framework: How bad can a framework be for SMES?

- G-Cloud founder voices procurement worries

- Short on machine guns, German army armed turrets with broomsticks

- Why public and private contracts are different: I have been making similar points for a few years.

- Some light comic relief, courtesy of #HumanitarianStarWars:

Public Contracts Regulation 2015 - Regulation 2

Regulation 2 - Definitions

Albert drew first blood today with his post here, so it's my turn to reply.

Regulation 2 sets out the definitions for the purposes of the Public Contracts Regulation 2015. By and large they follow Article 2 of Directive 2014/24/EU but with a few differences worth mentioning.

Albert remarked (correctly) that using an alphabetical order is a better legislative technique than the mumble found in Article 2 of the Directive and also a couple of definitions that were omitted in the Regulations. He also provides a legal eyed comment on Regulation 2(2) and the important discrepancy between it and the Directive.

In my post will cover structure, new additions to the definitions list and the typo.


First, the division into paragraphs and sub-paragraphs is different from that found in the Directive. For example, if we look into the definition of "bodies governed by public law", the content in both pieces of legislation is identical but the way it is presented is markedly different. The Directive follows a discursive approach with all elements necessary for the definition contained in a long sentence, whereas the Regulations actually divides it into the constituent parts. In a sense this is similar to the way I used different coloured markers to highlight different parts of a rule as a student: main rule in yellow, special case 1 in orange, special case 2 in green, exception in blue and so on and so forth. Although the Directive approach is easier to read (in my view), the Regulations structure is more logical and reduces the possibility of misinterpretation. However, this approach is not followed consistently as the definition of innovation could have had the same treatment (more on that later).

In other words, the Directive style is easier to follow on a quick reading, but the stop-start structure imposed by the sub-paragraphs of the Regulations facilitates the application of the rules when one is trying to figure out what they mean.

Additions to the Directive's definition list

There are a few additions to the Directive's own list of definitions: academies; maintained schools; the Queen; and framework agreements. Albert has the complete package of differences, but these are the ones which attracted my attention.

The first two are due to the different structures schools can adopt in the UK which has an impact in their governance (ie, state schools are controlled by local councils, but academies are not).

I am fascinated that the Queen gets a mention in the Public Contracts Regulation 2015. You can tell I was born and bred on a republican country when I look puzzled to the exception for purchases made by the Queen in her personal capacity. It seems then that the Queen is in no obligation to follow procurement rules when it comes to personal purchases (would racing horses count as personal purchases under this definition?). I will quizz Albert to know if the same exception exists under Spanish law. It is interesting to note that this exception is not extended to other Royal family members: does it mean then they are also subject to procurement rules even when conducting purchases on a personal capacity?

Finally, framework agreements are absent from the Directive's definition list, but get a mention in this Regulation. They are mentioned but not actually defined as Regulation 2(1) simply cross-references to Regulation 33(2). Why? If this is a definition list you might as well put in the definition in or not mention it at all! Especially because Regulation 33(2) states that "In these Regulations, 'framework agreement' means (...)." Well if the meaning extends the whole of the Regulations, then Regulation 33(2) text should be simply part of Regulation 2 instead. Lawmakers had no problems in adding new definitions to the list, so they could have done the same with framework agreement.

The typo

Article 2 of the Directive includes a long-winded definition of innovation. 3/4 of it make perfect sense, but the final bit which connects to societal challenges and the Europe 2020 strategy is just unnecessary. It complicates the definition without adding anything valuable to it. Moreover, the Europe 2020 will be outdated by 2020, which means the definition will be obsolete in 5 years, probably way before we get a new Directive. Every time I speak publicly about innovation in public procurement I rail against this part of the definition.

What can we find in the Regulations regarding the definition of innovation then? Well, we can find a nice typo: where it refers to the Europe 2012 strategy it should obviously be referring to the Europe 2020 one. The Regulations made the innovation definition obsolete even before they came into force and shows how unnecessary the reference was in the first place. Furthermore, when we get to innovation partnership bit, we will discuss at length what may be the implications of the reference to this strategy.

On a less farcical note, this is a small typo and typos should be expected on documents this big. Having said that, for the time being I will attribute to the rush on getting the Regulations out before the end of the current Parliament. If you find other typos, please let us know in the comments.

PS: Another of my pet peeves is the need for pecuniary interest for a contract to be considered a public contract under Directive 2014/24/EU and the Regulations, but this is not the place nor time for that particular rant.

Notes from conference on Framework Agreements

Aarhus City Hall

Aarhus City Hall

As promised last week, the Conference on Framework Agreements organised by my good friend Dr. Marta Andrecka at the University of Aarhus, produced some interesting food for thought. Personally, I am very much a fan of small conferences with a limited number delegates (20-40) talking about a specific topic. Nothing like getting a few people from different countries with similar problems talking about their experiences. In larger conferences (200+) it is easy to get lost in the myriad of threads and talks. 

So what did I learn from the day?

1. Competition is a key issue for framework agreements

Not really a new issue for me, but it is heartening to see others with similar concerns to mine about the impact of framework agreements in competition, particularly foreclosure of markets for small firms. 

2. Binding vs non-binding nature of framework agreements

This was unexpected. By looking at Directives 2004/18 and 2014/24 and practice here in the UK with its hordes of zombie (unused) frameworks I assumed that framework agreements were non-binding, that is a contracting authority could just as easily buy from another source. Turns out that under Swedish contract law framework agreements are binding. This is probably connected with the nature of the framework agreement itself: is it a contract or not, whose answer probably depends on applicable national contract laws.

The possibility of having parallel framework agreements for the same subject matter was also raised here (and in connection with competition issues) and again, it seems answers vary from country to country.

3. Are they more similar to award or selection stage?

Once more, probably connected with the nature of framework agreements. Abby Semple argued that due to the need for award criteria to be used during set up and the possibility of relying on Article 72 of Directive 2014/24, framework agreements are more akin to an award than a selection stage. I would add that if that is the case then, that in consequence they needed to always have a contractual nature, which poses some issues in certain national contract laws (ie England and Wales, where consideration is necessary for the existence of a contract). My view, is that they effectively constitute a selection stage albeit one where award criteria are used, unless we are talking about single supplier, binding framework, with all the contractual details set in advance.

4. How do we define contract value?

Another issue that touched by multiple jurisdictions is the definition of contract value. This appears to be particularly problematic in countries where frameworks do not have a binding nature and/or countries where contracts can be extended beyond the duration of the framework.

If you are interested in my presentation, you can download the PDF from the presentations page.




Random musings on framework agreements

I am talking next week about framework agreements at a Conference hosted by Aarhus University, so perhaps some random musings about my presentation are in order.

1. UK* regulation of framework agreements is barebones

Both the outgoing Public Contracts Regulations 2006 and the incoming Public Contracts Regulations 2015 (Draft) simply copy and paste the content of Directive 2004/18/EC and 2014/24/EU with very minor alterations. They do not solve any of the underlying issues. Nor does the OGC Guidance from 2008.

*England, Wales and Northern Ireland share the Regulations mentioned above. Procurement is a devolved power in Scotland which has its own Regulations.

2. Framework usage in the UK is going through the roof

Seriously, check my previous post here. For comparison, UK contracting authorities publish around 2,500 open procedures every year. I know we are comparing apples to oranges, but I suspect more and more money is going through framework agreements.

3. Contracting authorities are very creative when it comes to "call-offs"

As the Regulations are moot on how "call-offs" are supposed to be run and appear to leave some scope for only part of the qualified suppliers to be invited, contracting authorities in the UK are very creative on how they carry them out. All suppliers? Selection of suppliers? Rotation of suppliers? Luck of the draw? You name it.

4. No one really knows what happens inside frameworks

Frameworks are blackboxes. No one really knows what happens inside them or how much money is effectively routed through them. Contracting authorities face few risks of challenge. Contract challenging is the exception and not the rule in the UK and more so inside frameworks. My gut feeling is that framework agreements are a great place to hide unsavoury practices.

5. They are bad for competition

By definition, framework agreements exclude all suppliers except the ones inside the framework for all contracts tendered through them. As selection (at least in the UK) is focused not only in the tenders but also in the information about the tenderer, SMEs and and startups are always at a disadvantage. I could go on and on and on, but I am planning to return to this point in more detail next week.