All you need is the

The government’s announcement on 10 September 2004 that registered social landlords are “contracting authorities” for the purposes of the EU Public Procurement Rules had the potential to alter dramatically the procurement strategies of registered social landlords. But the use of “framework agreements” between RSLs and contractors can lead to long-term partnering arrangements and is increasingly being seen as a means of reducing the time and cost burden on those responsible for procuring works and services on behalf of RSLs.

The fact that frameworks are becoming well established in the market has been recognised by the European Commission and the procurement directive due to be implemented in the UK in January 2006 is expected to acknowledge that they are permissible under the rules.

Bearing this in mind, it is important for all RSLs to be aware of the flexibility and efficiencies offered by frameworks.

What is a framework?

A framework is an agreement between an RSL and a panel of contractors and consultants. The size of the panel will vary depending on the scope of the works and services required by the RSL (for instance, frameworks often cover a combination of new-build works, refurbishment works, reactive and planned maintenance services and professional consultancy services). Specific contracts are then “called-off” under the framework (with individual contractors and consultants or following a “mini-competition” as the circumstances require). There is, however, no obligation on the RSL to enter into any call-off contract under the framework.

Current market practice provides that a framework should continue for a maximum of four years and it is anticipated that this will be reflected in the procurement directive. However, the rules do not limit the maximum duration of call-off contracts (for instance, long-term partnering agreements continuing for more than four years are permissible).

Providing the framework is procured in accordance with the rules, there is no need to issue a notice in the Official Journal for each contract

The call-off contracts must not depart substantially from the key commercial terms established under the framework. So including a range of options in the framework ensures flexibility. For instance, a framework could provide for the price payable under a call-off contract to be calculated by reference to a schedule of rates, hourly rates, lump sum fixed price or target price depending on the particular circumstances.

Frameworks are becoming increasingly popular for a number of reasons:

• Provided the framework is procured in accordance with the rules (issuing an Official Journal notice and applying the appropriate award procedures for inclusion on the panel), there is no need to issue an OJ notice for each subsequent call-off contract. The resulting time and cost efficiencies are the principal reasons behind the success of frameworks.
• Frameworks allow RSLs to maintain and improve existing commercial relationships and to develop new commercial relationships (whether by appointment to a panel or under a long-term partnering agreement called off under the framework). Long-term partnering relationships arising under a framework are key to delivering best value.
• Appointment to a panel under a framework allows the relevant contractors and consultants to benefit from potential repeat and on-going projects and instructions. This is essential for successful long-term partnering relationships between the RSL and the contractors and consultants.
• Frameworks can provide the impetus for an RSL to review its overall procurement strategy. Standardisation of consultants’ appointments and amendments to standard form contracts offer a consistent approach, reducing procurement costs, and gets the most out of the RSL’s bargaining position.

That said, the principles of non-discrimination, equal treatment and transparency required under the rules still apply to the award of call-off contracts. RSLs must ensure that call-offs are not awarded on the basis of habit or mere preference and the framework must set out clear and objective procedures for the award of call off contracts.

Provided these requirements are satisfied, frameworks can deliver best value and the associated benefits offered by long-term partnering arrangements. Frameworks offer a flexible and efficient response to the application of the rules to RSLs. Fears that the rules would need to be followed for procuring each applicable contract have turned out to be unfounded.