Procurement in a Nutshell – Procurement Act 2023 Guidance: Frameworks
16th August, 2024
This Nutshell will evaluate the recently published guidance on the scope and operation of 'Frameworks' under the new Procurement Act.
The Procurement Act 2023 is expected to come into force on 28th October 2024.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016
Key terms
Section 45 defines a “framework” as a contract between a contracting authority and one or more suppliers that provides for the future award of contracts by the contracting authority to such suppliers.
Section 49 defines an open framework as a: ‘scheme of frameworks that provides for the award of successive frameworks on substantially the same terms’. We will explore the specific requirements relating to open frameworks in more detail in a future Nutshell.
Award of frameworks
The guidance states that while most frameworks will be awarded following a competitive tendering procedure, contracting authorities are permitted to directly award a framework under section 41 or section 43, provided the framework is not an open framework. The procedural requirements expected of contracting authorities when conducting a competitive procurement, or issuing a direct award, apply equally to the award of a framework. Please click on the following links for our analysis of the guidance on competitive tendering procedures and direct awards.
Notices required for awarding frameworks
A pipeline notice is required if a contracting authority considers that it will, in the coming financial year, pay more than £100 million under call-off contracts. The value of a framework itself is not taken into account when calculating the value of the contracts to be awarded.
The guidance states that Tender Notices for frameworks are generally the same as for other contracts, with some additional information including (among others):
- details of the selection process to be applied on the award of call-off contracts;
- the term of the framework and the reasons (where relevant) for awarding a framework which exceeds the maximum term; and
- identification of all contracting authorities that may award call-off contracts under the framework during its term.
The guidance advises that a Transparency Notice will generally be used in place of a Tender Notice if a contracting authority intends to directly award a framework.
A Contract Details Notice is required following the award of a framework.
Awarding call-off contracts
Contracting authorities can only award call-off contracts under a framework established by a contracting authority. The guidance stresses that it is for the contracting authority to ensure that the framework under which it awards a call-off contract has been established by a contracting authority.
If a contracting authority wishes to award a contract under a framework established by a person that is not a contracting authority, the framework must have been set up in the name of a contracting authority or authorities. The guidance states that he non-contracting authority entity would have to be acting as the agent of the named contracting authority (the ‘principal contracting authority’) if it sets up and administers the framework. In these circumstances, it will be the principal contracting authority that is responsible for ensuring that the framework complies with the Act.
Call-off contracts may be awarded with or without competition between suppliers on the framework.
If a ‘competitive selection process’ is used, the process must be set out in the framework. However, the guidance explains that whilst the selection process must be set out, the level of detail is not specified in the Act and so contracting authorities can be flexible with the information they provide.
A condition of participation may be used in a competitive selection process (so long as it is set out in the framework) and is defined as a condition that a supplier must satisfy in order to be awarded a call-off contract. Such conditions must be a proportionate means of ensuring that the suppliers on the framework have the legal and financial capacity to perform the contract being procured. Furthermore, in a competitive selection process, any assessment of suppliers’ must be based only on the award criteria that was used to assess tenders when the framework was awarded.
A contracting authority can only award a contract without competition when the framework sets out an objective mechanism for supplier selection and the core terms of the call-off contracts to be awarded. The guidance explains that an objective mechanism for supplier selection may, for example, be where call-off contracts are awarded on a rotational basis.
Direct award under sections 41 or 43 cannot be used to award a call-off contract under a Framework. The guidance makes clear that if a direct award is permissible under the Act, the contracting authority may directly award a contract to any supplier, including to a supplier on a framework, outside of the selection process for the framework.
Assessment summaries are not required to be provided to suppliers following the award of a call-off contract. However, contracting authorities are encouraged to provide them as a matter of best practice.
Excluding suppliers
Contracting authorities must consider whether suppliers are excluded suppliers before awarding a call-off contract, even though this will have been considered at the time the framework was awarded.
Section 48(1) allows contracting authorities to exclude a supplier from participating in a selection process under a framework if it is an excluded supplier or becomes an excludable supplier. This is done by implying a term into every framework that the contracting authority may exclude a supplier on this basis.
Notices required for awarding call-off contracts
Whilst not a requirement of the Act, contracting authorities are encouraged to include call-off contracts valued at over £2 million in their Pipeline Notices.
A Tender Notice is not published for call-off contracts and a Transparency Notice is not relevant for call-off contracts.
Contract Award Notices are required for all call-off contracts.
A Contract Details Notice for a call-off contract requires much of the same information as is required for an open or competitive flexible procedure.
Fees
Section 45 provides that fees can only be charged to suppliers that have been awarded a call-off contract and must be set as a fixed percentage of the estimated value of the call-off contract. The guidance defines a ‘fixed’ percentage as a fee which may not change during the lifetime of the framework.
The guidance makes clear that it is not permissible to charge suppliers to gain access to a framework or any other fees associated with the management of the framework.
Duration
The maximum term for all frameworks (except defence or utilities frameworks) is four years (section 47(1)). However, the maximum term does not apply where the contracting authority considers that the nature of the call-off contracts to be awarded requires a longer term (section 47(2)). Where a framework exceeds the maximum term, the contracting authority must publish the rationale for the longer term in the Tender or Transparency Notice for the framework.
The guidance also makes clear that call-off contracts may extend beyond the term of the framework.
What does this mean?
The emphasis on transparency generated by the Act means that contracting authorities will need to be rigorous when using frameworks, particularly when utilising a third-party framework, as contracting authorities bear the risk of challenge when making decisions. Contracting authorities should ensure that the framework has been set up lawfully and have regard to the importance of the objectives in the Act.
For further information please contact Melanie Pears or Tim Care in our Public Sector Team
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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