What a “Framework contract” means
When reading bid notices published one might come across a statement “under framework contract or agreement “. To many it becomes a debate on what exactly this means or what entails before they actually pay for the bid. In Uganda today it’s a fact that this kind of agreement is becoming popular in government and other procuring and disposing entities. This method of purchasing generally involves a contracting authority (or authorities) advertising an opportunity and then entering into a contract or other arrangement with one or more economic operators for the provision of works, supplies or services over a fixed period.
In the context of negotiations, a framework agreement is an agreement between two parties that recognize the parties have not come to a final agreement on all matters relevant to the relationship between them, but have come to agreement on enough matters to move forward with the relationship, with further details to be agreed to in the future. Also in relevancy to procurement, a framework agreement is an agreement between one or more businesses or organisations, “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, where appropriate, the quantity envisaged”.
When a requirement arises for a work, supply or service of the type covered by the framework arrangement, a contracting authority that is a beneficiary of that framework can call off its requirements under the framework without the need to follow a further tendering process.
Frameworks may also involve one or more contracting authorities as purchasers and one or more economic operators.
The rationale behind the framework method of purchasing is to achieve savings in both costs of procurement and time spent in the procurement process. It is worth noting that the most significant savings are commonly achieved when purchasing using framework agreements is combined with centralized procurement and e-procurement.
However frame work purchasing is not favorable for all kinds of procurement.
The most appropriate use of framework agreements is where a contracting authority has a repeated requirement for works, services or supplies but the exact quantities are unknown.
In order to assess the suitability of a framework agreement, contracting authorities need to understand the advantages and disadvantages of framework agreements, the different types of framework agreements, how they are set up, and how they operate in practice.
Some circumstances of framework agreements application may include:
1.A single government department enters into a framework agreement for stationery with three suppliers.
2.Four neighboring local authorities enter into a framework agreement with one economic operator for the maintenance of roads.
3.A central purchasing body, acting on behalf of 10 health bodies, enters into a framework agreement with four providers for the supply of emergency vehicles.
Once a framework agreement is reached the winner of the bid will always make a call off order once the procuring and disposing entity advertises contents of the agreement signed.