Procurement lawyers warn of uncertainty and confusion in use of framework agreements

March 29, 2012

Leading lawyers have this week warned of legal uncertainty, ambiguities and confusion in relation to the use of framework agreements in public procurement.

In a briefing paper the Procurement Lawyers’ Association said: “The concept of a framework agreement is that it is, essentially, an arrangement which establishes the contractual terms which will apply to subsequent orders made for the goods, services or works covered by the framework over the period of time during which it is in force.

“The inclusion of specific provisions in the Public Sector Directive covering framework agreements clarified the position in terms of the availability of framework agreements but also introduced restrictions and controls over their use and ambiguities about the legal rules.”

The PLA also warned of confusion as to the precise coverage of the rules. “This confusion results primarily from lack of clarity as to the use of the terms ‘framework agreements’ and ‘framework contracts’ and also whether or not framework contracts are a type of public contract,” it said.

The Association pointed out that a mere framework agreement sets out the terms which apply if the parties conclude a contract, but does not itself constitute a public contract obliging either of them to do anything.

“The suggestion that a ‘framework contract’ is the same as any other public service contract seems to confuse the establishment of terms for the delivery of works, services or supplies with an obligation to provide, receive and pay for those works, services or supplies which form its subject-matter,” it said.

The paper highlighted the large number of non-binding ‘buying club’ framework agreements that allow contracting authorities to shop around for the supplier offering the best deal.

But it warned that from the provider’s perspective, a key concern was that they might incur potentially considerable costs in tendering for appointment to a framework agreement with no guarantee of work once appointed.

The wide-ranging paper, The Use of Framework Agreements in Public Procurement, can be downloaded here. It covers:

Framework agreements in context;
Defining framework agreements and distinguishing them from public contracts;
Valuation;
Framework agreements divided into lots;
Setting up and participating in framework agreements;
Duration of framework agreements;
Duration of contracts awarded under framework agreements;
Who can call off contracts under a framework agreement;
Can eligibility criteria be re-considered in the lifetime of the framework agreement?
The “improper use” rule;
Remedies for breach of the rules on framework agreements.