How to make the best use of framework agreements

Andrew MillrossPartner, Anthony Collins Solicitors LLP

CoverageFrameworks in context

Brexit and deregulation

Value for money

Challenge costs

Valid frameworks

Potential framework users

Single provider framework call-offs

Multiple provider framework call-offs

The leaseholder consultation “issue”

Frameworks in contextPrivate and public sector frameworksReasons for setting up and using frameworksPartnering

Latham (1994) and Egan (1998) “Efficiency from stability”

Bulk purchasingEconomies of scale

Avoiding individual procurements

European Economic Area – free trade agreementEU procurement rules incorporated into EEA rules EFTA Surveillance Authority

Agreement on Government Procurement (GPA)

Implied tendering contractCentral Tenders Board v White (Montserrat), 2015 -

general duty to treat tenderers fairly and equallyJ & A Developments v Edina Manufacturing, 2006 –

private sector tenderer held to commitment to follow NJCC Code

Deregulation“Contracting authorities”

“Bodies governed by public law” “meeting needs in general interest, not having an

industrial or commercial character” – Mannesmann,1998

and any of the following tests finance (more than 50% of turnover) –

Cambridge University, 2000 subject to “management supervision” –

Commission v France, 2002 controlled by another contracting authority

(board or shareholding)

Value for moneyAchieving economy, efficiency and effectiveness Right outcomes at the right costObtaining the maximum benefit over time with the resources available

HCA Regulatory

Framework – Value for Money

Standard

LA duty to make

arrangements to secure

continuous improvement in exercise of

functions

Costs of procurement challengesTypical legal costs (if challenge not settled) Application to lift suspension – £50KMain hearing – £200KRemedies hearing – £50KPlus a % of other side’s costs if you lose

Likely “win” recovery – about 70%

Delay in concluding procurement

Valid framework agreementsIs it actually a framework? Must establish the terms

(including as to price)

Commission Explanatory Note Spot market plus X%

Henry Bros (No 2), 2008 Profit and prelims only (no

reference project) “Insufficient to determine

MEAT”

“an agreement or arrangement…

which establishes the terms (in particular the terms as to

price..) under which the providerwill enter into one or more contracts with a contracting

authority…”

Reg 33(2) PCR 15 (Reg 2(1) PCR 06)

Which Regulations apply?Still lots of 2006 Act framework agreements

Edenred, 2015 Variation provisions

“Nothing in these Regulations affects

the award of a specific contract

based on a framework

agreement where the framework agreement was

concluded before 26th Feb 2015 or

following an award procedure begun before that date.”

Reg 118(3) PCR 15

Potential framework usersApplies to both client and provider

Client identification by list reference to website list not generic

Correct provider Lightways v Inverclyde

Council

“Those procedures may be applied only

between those contracting

authorities clearly identified for that purpose in the call for competition and

the economic operator party to the

framework agreement as

amended.”

Reg 33(5) PCR 15

Types of framework agreement

Multiple providercall-offs

Choice of call-off method must be

based on objective criteria

set out in the procurement

documents for the framework

agreement

Reg 33(9) PCR 15

Single provider Direct call-off

Multiple provider Direct call-off Mini-competition Mini-competition over

specific terms

Multiple provider call-offs Objective process for

deciding between direct award and mini-competition

“Sausage machine” approach

Single provider call-offsCall offs “Within the limits laid down in the framework

agreement” Can invite provider to “supplement its tender as

necessary” – Reg 33(7) PCR 15

“Supplementing” tender PLA view – minor call-off specific items (para 9.16) Succhi di Frutta, 2001 equal treatment issue

“Wriggle room”

Substantial modification = new contract risk of “illegal direct award” VEAT notice and Fastweb, 2013 Edenred, 2015 and Reg 72 PCR

15 Denfleet, 2005 – price

reductions

Called off contract “cannot include any “substantial modifications” to the terms laid down in the framework agreement” - Reg 33(6) PCR 15

Multiple provider – direct award Direct award Call-off by “following terms and

conditions of the framework agreement”

“Substantial modifications” outlawed

No right to “supplement” tender

No client discretion permitted

Direct award possible only where the framework agreement sets out all the terms of

the call-off contract

the “objective conditions” to decide which provider is awarded the call-off contract

Reg(33(8)(a) PCR 15

Mini-competitionMini-competition where terms of call-off contracts not finalised terms finalised but possibility of

competition on some of them reserved expressly in the framework agreement

Competition reopened on the basis of the same terms more precisely formulated terms where appropriate, other terms referred

to in the procurement documents for the framework agreement

Leaseholder consultation – the issue

Applies to variable service charges for “Qualifying Long Term Agreement” (QLTA) “Qualifying Works” (QW) – any works on a building “Relevant Costs”

£100 “per year” under QLTA £250 for QW (Philips v Francis, 2014 – “per project”)

Consultation regime Depends on whether “public notice” (OJEU notice) is required Where public notice is required, first stage of leaseholder

consultation must be before OJEU notice submitted Cannot do this (it’s too late) where using framework agreement

that has already been procured (eg by a buying club)

Leaseholder consultation – solutions

Separate contract for leaseholderblocks Treat as separate programme to avoid

aggregation rules “Two estimates” consultation method for

“leaseholder blocks” contract if below EU works tendering threshold

Beware the “no cheating rule” – Reg 18 PCR 2015

Dispensation from consultation Daejan, 2013 - likely where leaseholders

not prejudiced Need to serve all affected leaseholders

and meet their legal costs

Decision making and riskPossible challengers Regulator – need “an argument” Other framework contractor Contractor not on framework

Time limit Turning Point, 2012

Consequence of challenge Ineffectiveness

NB civil penalty Effect of standstill period Damages

Options appraisal & risk scoping

Regulators Local authority

monitoring officer HCA European

Commission EFTA Surveillance

authority

Questionsandrew.millross@anthonycollins.com 0121 212 7473