Procurement Act Reforms – FrameworksUnder the new Procurement Act 2023, the implementation and award of Frameworks changes from 28th October, alongside a change to Dynamic Markets which will replace Dynamic Purchasing Systems (DPS).
FrameworksSection 45 of the new Procurement Act defines a Framework as a ‘contract between a contracting authority and one or more suppliers that provides for the future award of contracts by a contracting authority to the supplier or suppliers’ and must include the following information:
- A description of goods, services or works to be provided under contracts awarded in accordance with the Framework;- The price payable or mechanism for determining the price payable;
- The estimated value of the Framework;
- The selection process for awarding onto the Framework;
- The Framework term;
- The contracting authorities entitled to award public contracts under the Framework;
- Whether the Framework is awarded under an Open Framework. Closed and Open FrameworksCurrently, a Framework runs for a duration of four years (this can be longer in certain situations and sectors) and once awarded, the suppliers are awarded a place on the Framework for the duration, unless they become excludable during the term, and the Framework cannot be reopened. Under the new act, this ‘closed’ Framework approach is still an option.
However, the Procurement Act 2023 also allows for ‘Open Frameworks’ to be established. An Open Framework is defined as ‘A scheme of frameworks that provides for the award of successive frameworks on substantially the same terms.’ These Frameworks can be permitted to run for a maximum of up to eight years and the Framework can be reopened to new suppliers during this term. Under Section 49 of the Procurement Act, the below criteria must be met to establish an open Framework.
- The Framework must be opened at least once during the first 3 years of the term;- It cannot run for more than 5 years without being reopened;- There must be a minimum of two suppliers on the original Framework;- Upon reopening of the Framework, this must be under ‘substantially the same terms’ as when the Framework was initially established.
This new Open Framework route to market offers a greater deal of flexibility to Contracting Authorities than under the existing regulations. In leveraging this flexibility, this allows authorities to:- React and respond to new innovations within the market;- React to market fluctuations;- Engage with new suppliers in the market;- Provide multiple opportunities for suppliers to tender for the Framework, which should mean this is less likely to exclude SME’s.
Awarding a contract under the Frameworks can still go through a direct award procedure or a mini competition. Further information on these mechanisms will be discussed in August’s CHIC CHAT. Dynamic Purchasing Systems (DPS) are changing to Dynamic MarketsAlongside Frameworks, Dynamic Purchasing Systems (DPS) are a route to market for Contracting Authorities when going out to tender for works, services and supplies by creating a dynamic pool of pre-approved suppliers who are suitable to make submissions for the requirement.
Dynamic Markets is the new term for this mechanism and it allows for a facilitated process for all procurement types, rather than the ‘off the shelf’ and commonly purchased goods or services that DPS are currently established for.
Sections 34-40 of the Procurement Act set out the basics on how a dynamic market is to be procured and operated, whilst confirming that a fee may be charged as a percentage of the value of an awarded contract.
Dynamic Markets must be open for membership throughout the term of the market and there is no limit to the number of suppliers that can be awarded a place under the Dynamic Market, however established criteria must be met for the application to be approved. There is no specified mention of a timescale for onboarding suppliers under a Dynamic Market, but the Act states that membership applications must be considered within a ‘reasonable period.’ There is no change regarding works awarded under a Dynamic Market, which like a DPS, must go through a mini competition process.
It is worth noting that any current DPS cannot be operated beyond the 27th October 2028 (4 years after the Procurement Act go live). CHIC will establish a rolling programme for the replacement of our current DPS services to Dynamic Markets during this period. ProceduresThe new Procurement Act also brings in a change in procedures carried out to establish a Framework.Currently there are 6 procedures when undertaking a Framework procurement; Open, Restricted, Competitive Negotiation, Competitive Dialogue, Innovation Partnership and Negotiation Without Notice.
These are now consolidated into three procedures:- Open Procedure - Same as current open procedure to facilitate ‘off the shelf’ competitions;- Competitive Flexible – Giving Contracting Authorities the ability to design their own procedure with multiple stages if possible- Direct Award – Only permissible in special circumstances (outside of a Framework.) Competitive Flexible ProcedureThe Competitive Flexible Procedure ‘allows the contracting authority the freedom to design its own procedure.’ A Framework that is established under this procedure can include:
- Multiple stages – there are no limit to the number of stages that can be carried out throughout the tender process;
- Access to a range of tools and commercial skills;- A requirement for site visits, presentations, dialogue and negotiation;- Prototypes being assessed to ensure the proposed goods are fit for purpose.- Refinement of the award criteria at each stage provided that this is made clear in the original tender notice and associated documents.
It must be stated at the commencement of the tender that the Procurement will be undertaken under this procedure and Contracting Authorities must be made aware that in designing this procedure, they are mindful that the tender process is not unnecessarily complex for the requirement, especially if SMEs’ are likely to bid and this complexity creates a barrier for participation.
The changes in Frameworks and Procedures under the new Act seek to maximise public benefit and deliver best value for money, whilst having regard to the National Procurement Policy Statement and the reduction/removal of barriers to allow for SMEs’ and new supplier participation.
If you have any questions about the Procurement Act, please get in touch with Sam Domican at tenders@chicltd.co.uk.
