Under the Procurement Act 2023 (“the Act”), frameworks and dynamic markets are available as commercial tools to assist contracting authorities in the future award of contracts. These differ from the frameworks and dynamic purchasing systems under the old Regulations.
With ‘go live’ on 24 February 2025, it is crucial that contracting authorities understand the changes to, and uses of, the commercial tools available to them in the procurement process.
As part of our series of articles on the changes being brought about by the Act, we outline the key changes to the commercial tools available to contracting authorities, and how best they can be utilised.
Of note is that existing framework agreements and dynamic purchasing systems (and call-offs under them) will remain live after the new Act comes into force. As set out in our article on transition provisions, framework agreements continue until their expiry and DPS expire automatically on 23 February 2029 unless terminated sooner. Thus, in practice, contracting authorities are likely to be running some of their procurements under the old Regulations for several years to come.
Frameworks
A framework is a long-term arrangement between a contracting authority and one or more suppliers, outlining the terms and conditions for future contracts.
Many elements will be familiar to procurers used to the old Regulations. For example, under the Act:
- Frameworks can be single supplier or multi-supplier. They must set out the mechanism for awarding individual call-off contracts.
- Call-offs from a multi-supplier framework may involve mini-competition. In this case, the award criteria must be based on some or all of the criteria in the framework – though these criteria can be refined.
- Call-offs from multi-supplier frameworks may alternatively be made without mini-competition, so long as they follow an objective mechanism set out in the framework and the core terms of the contract are as in the framework. Guidance allows a taxi-rank system, although we consider that authorities should satisfy themselves that such a taxi-rank will in fact deliver value for money.
- The tender notice must estimate the framework value. Guidance makes clear that once that value is exceeded the contracting authority must either terminate the framework or increase its value in line with the rules on contract modifications.
- There is no obligation to standstill at call-off stage (though there are benefits in running a voluntary 8 working day standstill).
- Frameworks can only be operated by contracting authorities (not by private sector or commercial enterprise).
- The framework must include a description of the goods, works or services and the price payable (or a mechanism for calculating the price) under call-off contracts.
However, the Act does introduce a number of changes to frameworks in the public procurement process, which aim to enhance transparency, efficiency and competition.
The key changes to public procurement frameworks brought about by the Act include:
- A term is now implied into every framework allowing contracting authorities in various circumstances to exclude a supplier from participating in contracts under the framework if they are, or become, an excluded or excludable supplier. This ensures that suppliers on frameworks continue to be fit to deliver public contracts and reduces risks to protection of public funds, the public, the environment, and employees’ rights.
- There is a new concept of an “open framework”. This allows a multi-supplier framework to be refreshed periodically, at least once in the first 3 years, thereby extending the duration up to a maximum of 8 years. Upon the refresh, new bidders must be allowed to bid for a place on the framework. This gives an opportunity for contracting authorities to re-test the market and work with suppliers who have the most advantageous solutions in the relevant circumstances. It reduces the risk of a framework becoming stale. There is no limit on the number of times the framework can be reopened within the 8 year period. This may encourage longer-term relationships between suppliers and contracting authorities, with more opportunity for collaboration. It may also lead to reduced procurement costs.
- The Act redefines the maximum duration thresholds for framework agreements:
- For standard public sector frameworks (except light touch regime), the maximum duration generally remains at 4 years.
- For open public sector frameworks, the framework must be refreshed within the first 3 years, and the open framework can last up to 8 years.
- For utilities and for defence and security frameworks, the maximum duration remains 8 years.
- Contracting authorities can use conditions of participation to shortlist suitable bidders when calling off a framework. This ensures that only suppliers who meet the specific requirement of the call of contract can participate in the opportunity; ensuring greater confidence that the supplier can deliver the specific requirements. The conditions of participation must be proportionate.
- At call-off, the contracting authority must publish a contract award notice.
Dynamic markets
The new rules on establishment and management of dynamic markets are described by the Government as a key reform under the Act aimed at enhancing the effectiveness and accessibility of public procurement.
Dynamic markets are similar to the dynamic purchasing systems and qualification systems under the old Regulations: they are lists of suppliers eligible to participate in future procurements.
There is greater flexibility to use dynamic markets for a wide range of goods, works and services compared with the old Regulations, that were limited to “commonly used purchases”.
If a contracting authority is carrying out a procurement under a dynamic market, it can only consider tenders from suppliers that are on the dynamic market. However, it must consider applications for membership of the dynamic market at all times and its application must be considered at the same time as a tender for a contract under the dynamic market.
Under dynamic markets:
- Contracting authorities may set conditions for membership of a dynamic market, similar to conditions of participation. These conditions must be proportionate. They assess whether suppliers have the legal and financial capacity and technical ability required.
- New suppliers can apply to be added throughout the lifecycle of the dynamic market. They are therefore open compared with frameworks and are less likely to go stale.
- The contracting authority must remove existing suppliers from the dynamic market if they are on the debarment list on mandatory exclusion grounds. It may remove suppliers who are excluded, no longer satisfy the conditions of membership or become excludable.
- There are no restrictions on the duration of the dynamic market or number of suppliers that can be part of it. This promotes a diverse and dynamic supply chain, allowing contracting authorities to swiftly incorporate new suppliers to better meet the needs of emerging markets.
- Tender notices are required to openly advertise an opportunity under the dynamic market, the notice makes it clear that being a member of the dynamic market is a requirement of the procurement. Suppliers not on the dynamic market may then apply for membership and participate in the procurement.
- To ensure transparency, contracting authorities must publish notices at various other stages, including upon the establishment of a dynamic market, in advance of changes, and upon termination.
- The Act does not restrict the addition of new contracting authorities during the life of the dynamic market, nor the contract terms that apply to individual contracts awarded under the dynamic market.
- Importantly, unlike the old Regulations, contracting authorities may charge suppliers a fee when they are awarded a contract under the dynamic market. Practically speaking, the restriction of fees has hindered wider establishment of dynamic purchasing systems by central purchasing bodies.
Curiously, whilst contracting authorities are required to consider applications from all suppliers, and authorities are not permitted to limit the number of suppliers in the dynamic market, the Act does not appear to impose an obligation to admit an eligible supplier. In practice, we consider that contracting authorities should grant membership to all bidders that meet the conditions of membership unless they are excluded or excludable.
Comment
The Act makes some important changes to the rules on frameworks and dynamic markets. The hope is that it facilitates better outcomes for contracting authorities, and that they will suffer less from stale frameworks.
We anticipate that going forward dynamic markets may become increasingly popular, whereas they are a relative rarity under the old Regulations.
It is important that contracting authorities are aware of these changes and how best to utilise the new commercial tools to ensure the best outcomes.
We’re here to help
Our dedicated Procurement Hub offers access to various online resources, where our leading procurement experts keep you updated during the transition to the new regime. In the coming months, we will continue to brief you on the changes expected at each stage of the procurement lifecycle, specifically addressing the new Act and guidance.
Whether you’re a contracting authority or a bidder frequently tendering for regulated contracts, our team of Procurement specialists is here to assist you through the transition.
