The new EU Public Sector Procurement Directive1 replaces the existing Directives covering public procurement of services, supplies and works. The Directive includes a provision for framework agreements under Article 32.
The Directive defines a framework agreement as “an agreement with suppliers, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and quantity”.
The EU Public Sector Procurement Directive applies when public authorities seek to acquire goods, services, or works. The framework agreement may, itself, be a contract to which the EU procurement rules apply. Alternatively it may simply be an agreement under which contracts are only formed when goods, works and services are called off.
The UK Regulations2, which implement the Directive, came into force in the UK on 31 January 2006.
Setting up the framework agreement:
- The framework should contain a mechanism that will be applied to pricing particular requirements during the period of the framework. It should also be possible to establish the scope and types of goods and/or services that will need to be called off under the agreement.
- Obligations on issues of sustainability, Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) and The Code of Practice on Workforce matters should be met
- It is necessary to advertise the framework agreement in the Official Journal of the European Union (OJEU) if:
- Its estimated maximum value over its lifetime exceeds the relevant EU threshold (€5,278,000 for works, and €137,000 up to €750,000 for supplies or services depending on the type of contracting authority3).
- the procurements in question are not covered by one of the exclusions set out in the Directives
An OJEU Notice for a Framework Agreement the Notice must:
- make it clear that a framework agreement is being awarde
- include the contacting authorities entitled to call-off under the terms of the framework agreement (authorities can be individually named, or a generic description may be used
- state the length of the framework agreement (maximum of 4 years “except in exceptional circumstances”
- include the estimated total value of the goods, works or services for which call offs are to be placed and , so far as is possible, the value and frequency of the call-offs to be awarded under the agreement
- if the framework is not advertised, then in cases where the procurement is subject to the EU rules, an OJEU notice may be required for individual call-offs. It is therefore generally a good idea to advertise the framework agreement itself so that there is no need to consider the need for advertising as each call-off arises.
- once the OJEU notice has been dispatched, the authorities setting up the framework agreement should follow the rules for all phases of the procurement process covered by the Directives
- when awarding the individual call-offs the authorities do not have to go through the full procedural steps in the EU Directives again as long as they were followed properly in the setting up of the framework agreement. The relevant EU Treaty provisions and Treaty-based principles will still apply (i.e. Non-discrimination/non-distortion of competition
- The length of individual call-offs is not specifically limited by the Directives and therefore they may take the total period of the framework agreement over the four year time limit. This is allowed, although call-offs should not be granted very close to the end of the framework period in order to circumvent the framework maximum period of 4 years
Source: Office of Government Commerce
1 Directive 2004/18/EC, 31 March 04
2 UK Regulations: Public Contracts Regulations SI 2006 No 5, Utilities Contracts Regulations SI 2006 No 6, Regulatory Impact Assessment - Public Contracts Regulations 2006, Regulatory Impact Assessment - Utilities Contracts Regulations 2006
3 There are exceptions.
