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A guide to using pre-tendered frameworksThe process and benefits

About our guides We produce a series of guides to support public sector organisations and suppliers that are considering taking part in pre-tendered framework agreements and those who already use them. We see our guides as part of our core service – to bring buyers and suppliers closer together with a straightforward, shared language for procurement.

Information contained in this guide is not exhaustive and procurement legislation changes regularly, so please consult with LHC for the very latest information.

LHC Frameworks To discover more about the range of pre-tendered framework agreements provided by LHC, please visit the Framework Directory on our website:

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All LHC framework agreements can be used by appropriate public sector bodies without any fees or framework charges. A full buyer profile can be found on our website at www.lhc.gov.uk/buyerprofile.

LHC’s free to use procurement frameworks help local authorities,

social landlords and other public sector bodies make more informed

choices about the products and services they need for the construction,

refurbishment and maintenance of social housing and public buildings.

Built on a trusted combination of technical, financial, compliance and

sustainability expertise, our framework agreements enable clarity

and confidence in every purchasing decision.

About LHC

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What is a pre-tendered framework agreement? Find a simple explanation of the term, with clarification of the other words often used as short-hand labels for the same thing.

Is a pre-tendered framework agreement my best option? Decide whether using a pre-tendered framework agreements is the best process to use for your procurement.

How do I identify the most suitable framework? Understand how to select the best framework to meet your needs.

How can I be sure the framework will give me best value? Discover how pre-tendered frameworks offer you value for money.

How do I select the best supplier companies from the framework? Learn about the different ways you can choose a supplier from an approved list of companies.

How do I maximise the success of the framework? Find advice on how to manage a framework once a project is underway.

How do I check best value has been achieved? Understand the different ways you can measure the impact of the framework.

Where can I find more information? Refer to other useful sources of information on pre-tendered frameworks.

This guide contains information on the processes and benefits

attached to using pre-tendered frameworks, for professionals

involved in public sector procurement. It is relevant to all

frameworks operating in England, Wales and Scotland, not

solely LHC Frameworks, and draws on a number of different

sources to answer the following key questions.

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What’s inside?

Agreed agreements for purchasing Pre-tendered framework agreements set out product, works or service specifications together with the terms and conditions to be used on future contracts. They are used by public sector organisations to help them buy a particular product, works or services, without having to go through a full tender process each time a specific contract is required.

These specifications and terms and conditions last for the term of the framework, which can be set at any length of time up to a maximum period of four years, unless there are any over-riding reasons to plan the framework over a longer period.

Explaining pre-tendered Frameworks are referred to as “pre-tendered” for two reasons.

Firstly, because all of the research and thinking about what the framework should contain is done by or on behalf of public sector organisations (Contracting Authorities) before the actual supplies, works or services contracts are let. Often this pre-tender work is carried out by procurement providers, also known as Central Purchasing Bodies, like LHC. In this way, frameworks are created or “pre-tendered” for use by others.

Secondly, each framework is used to create a list of supplier companies or contractors who are able to provide the relevant products, works or services. Companies are assessed by framework providers, like LHC, who use a pre-qualification questionnaire to eliminate those who don’t reach the required standard.

A large part of the tendering process is therefore completed (“pre-tendered”) before public sector organisations make their call-offs from the framework for their specific projects.

The standards set by each contracting authority are different. LHC is known specifically for its technical thoroughness, as well as for the detailed understanding of the broad set of criteria buyers need their suppliers to fulfil.

Opportunities for supplier companies Being on a framework gives supplier companies the opportunity to win specific contracts. It does not automatically mean they will acquire them. Purchasing organisations are not under any obligation to purchase anything when they opt in to a framework, unless specifically provided for in the agreement. LHC imposes no such obligation on users.

Other connected terms Framework agreements may also be referred to as ‘framework arrangements’ although this term was removed from the definition of framework agreements for procurements commenced after 26 February 2015.

The process of making a contract or purchase through a framework is usually referred to as a “call-off.” Think of a call-off as the act of awarding a specific contract to one of the companies appointed to the framework. However, please note a contract or purchase is only fully concluded when a written order is placed under the terms of the framework.

EU compliancy EU compliant frameworks can only be set up by a contracting authority or an organisation set up on their behalf (e.g. Central Purchasing Bodies).

When you first enter the world of public sector procurement

the terminology can be confusing. Here’s a simple explanation

of what a framework is and some of the other connected terms.

What is a pre-tendered framework agreement?

Framework agreements are used

by public sector organisations to

help them buy a particular product,

works or services, without having

to go through a full tender process

each time.

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Framework agreements share risk giving buyers added protection

Public procurement rules The Public Procurement Directive sets out a strict process for procurement when public sector organisations are making a contract or purchase over a certain financial threshold. In addition, in the UK, the Public Contracts Regulations add a level of process to below threshold procurements. Many organisations already use frameworks to procure below threshold contracts, because of the value created. In the future it is likely that such use will increase to streamline an otherwise more complicated process.

EU threshold values are updated every two years but currently stand as shown in the table opposite. Figures are net of VAT.

Benefits of using frameworks The Cabinet Office (which succeeded the OGC) offers an excellent list of the benefits of frameworks, several of which are provided here:

-- They are a pre-completed route to market providing a vehicle to centralise procurement spend

-- Avoid the considerable cost of running your own procurement exercise

-- Enable sharing of procurement expertise and resources in a cost effective way and avoid duplication

-- Agreements share risk giving buyers added protection

-- Reduce the administrative burden in terms of the time and cost compared to running a full procurement procedure each time

-- Helps to ensure legal compliance

-- Providers, such as LHC, carry out extensive assessment of potential suppliers, eliminating the burden of assessment for public sector bodies and giving them confidence in the approved suppliers

-- Once an approved set of suppliers is in place on a framework agreement, a mini-competition between them will determine who works on an actual project, there will be fewer tenders to evaluate for each requirement, making it easier to compare tenders

-- Assurance of supply because if one supplier on a framework has a capability issue there would still be other suppliers who can deliver the requirement

-- Larger volumes are more attractive to suppliers and can achieve lower unit costs, not just when the framework is established, but also at the call-off stage

-- Smaller organisations working together will gain benefits usually only achievable by large organisations

General principles While the EU Public Procurement Directive applies to frameworks and individual contracts above the threshold values, the EU Treaty of Rome and subsequent Directives require that for all contracts – including those below the EU thresholds – the tender process must adhere to the general principles of openness, fairness and non-discrimination. Use of pre-tendered frameworks can demonstrate such compliance.

In addition the UK Regulations now include a specific requirement that all procurements and awards above £25,000 for sub-central contracting authorities are advertised in Contracts Finder.

However, a contract can be procured without advertising through a closed group, e.g., a set of approved supplier companies on a pre-tendered framework agreement. However, even under these circumstances, a framework call-off award must still be notified in Contracts Finder.

There are regulations governing the procurement process when purchases

exceed a certain threshold, so public sector organisations are required to

undertake lengthy and complicated processes. However, use of pre-tendered

frameworks can bring many benefits to streamline the process.

Is a pre-tendered framework agreement my best option?

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EU APPLICABLE UK ‘BELOW UK ‘BELOW THRESHOLD THRESHOLD THRESHOLD SUB-CENTRAL CENTRAL

CATEGORY Full EU compliant Full EU compliant process not required. process must UK process must be used. be used.

SUPPLIES £172,514 £25,000 £10,000 (other than central government and social services)

SERVICES £172,514 £25,000 £10,000 (other than central government and social services)

WORKS £4,322,012 £25,000 £10,000

Disadvantages of using frameworks The Cabinet Office also recognises that frameworks, like all procurement methods, can also have disadvantages in certain circumstances:

-- As a customer of a framework you are reliant upon how well the contracting authority (framework provider) establishes and manages the framework agreement

-- Once a framework is established no new suppliers can be admitted which presents barriers to new market entrants for the life of the agreement

-- Re-opening competition can be onerous if the framework agreement has been poorly structured

-- If you share responsibility for running a poorly structured framework with the owner of the framework agreement this could create issues with supplier management

-- Where anticipated volume levels are uncertain this may lead to suppliers building in a risk premium, which potentially reduces value for money

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Selection criteria When you first review a framework you need to make sure you are a qualifying organisation and are identified in the Contract Notice as entitled to use the framework. Beyond that you need to assess whether the essential ingredients you need for your purchase are contained in the framework, starting with the range of products, works or services. The following questions will help you decide:

-- Does the framework agreement adequately cover my scope of works? (the Regulations require that frameworks cannot be used for projects that vary substantially from the framework terms and conditions

-- Does the ‘framework provider’ have the authority, experience and expertise to offer the framework? (the framework provider must be a contracting authority as defined in The Regulations)

-- Does the term of the framework agreement fit in with my project timetable? (the specific call-off contract does not have to be completed within the term of the framework agreement but has to be started before the end of the framework term)

-- Can I work within the terms and conditions of the framework when a call-off takes place? (call- off contracts cannot be substantially different to the framework agreement)

Levels of flexibility There are some areas of flexibility within the terms and conditions of a framework. Before entering into a framework that could be too restrictive, ask the following questions:

-- What options are provided for the form of contract between your organisation and the selected framework company? (the framework may dictate the form of contract to be used for the call-off project or may allow the user some or full discretion)

-- What options do I have in terms of the range of product, works or service specifications? (as noted above, the framework may only be suitable if the products and services are covered in the terms and conditions of that framework without substantial amendment and the pricing mechanism enables best value to be ascertained)

The first stage of identifying a suitable framework is relatively

simple, as providers generally establish framework agreements

around three core criteria: Type of buyer, specific products

and/or services and geographic area.

How do I identify the most suitable framework?

-- Are the terms for pricing clearly set out? (this relates to both the pricing of the components of the framework agreement and the mechanism for varying prices during the term of the contract – see best value section on page 12)

-- What are the terms for selecting a company from the framework? (see supplier selection process on page 10)

Comparing framework In some areas there might be more than one framework or other contractual vehicle that could meet your needs. In this situation the Cabinet Office strongly recommends:

You avoid directly comparing offers from more than one framework agreement, i.e. by conducting mini-competitions under two separate frameworks and then comparing the best tender from each one to arrive at your winner.

This is because each assessment at mini-competition must be conducted on the basis of the terms laid down in the original framework agreement. So, at the stage of comparing the bids from two or more framework agreements, you will not have assessed bids using the same evaluation criteria and therefore would not be comparing like with like. This leads to issues of transparency and non-discrimination and so is a practice that is best avoided.

The Cabinet Office advice also notes that:

It is also inappropriate to propose that suppliers bid against prices offered under another framework.

This reinforces the point that you must not engage with suppliers in a covert or misleading way and should ensure the confidentiality provisions of each framework agreement are properly respected.

Ultimately, the most suitable framework agreement for your specific needs is the one which has the best fit in respect of terms and conditions and the one most likely to achieve the correct combination of quality and best value.

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To generate best value, framework agreements must include robust specifications and a clear evaluation of cost relating to these specifications

UK regulations define value for money as the optimum combination

of price or cost and quality to meet the user’s requirement.

How can I be sure the framework will give me the best value?

This UK definition of value for money broadly equates to the EU concept of awarding contracts on the basis of the “most economically advantageous tender”.

This requires framework agreements to include both a robust specification of quality of product and service to be provided, together with a clear indication of the evaluation of cost and a price mechanism relating to the specification(s).

Defining quality Quality is best described as meeting the expected standards but these may vary according to customer needs. The key to a good framework agreement is to be flexible enough to define standards through clear specifications of the products, works and services, and to offer a choice of the required level of quality for each customer. This then allows a user of the framework at call-off stage to:

-- Clearly define their quality need in relation to the framework including technical merit, aesthetic and functional characteristics, accessibility, social and environmental sustainability and local benefits

-- Establish key quality criteria which can be validated during the project

-- Conduct value management exercises without compromising customer satisfaction

Evaluating cost effectiveness The recently implemented Public Contracts Regulations 2015 encourage evaluation of cost using a cost-effectiveness approach, such as life-cycle costing.

Criteria that can be used, cover part or all of the costs over the life cycle of a product, service or works, e.g. acquisition costs, costs in use (energy and other resources), maintenance costs, end of life costs, such as collection and recycling costs, the cost of emissions and other climate change mitigation costs that relate directly to the product, service or works.

Ideally, framework agreements should therefore allow for the cost-effectiveness of bids to be evaluated.

Frameworks should also include price mechanisms which can be implemented at call-off stage to maximise continuing best value. Such mechanisms may take the form of:

-- Indicative price comparisons

-- Schedule of rates

-- Product price lists

-- Contract scenario pricing

-- Overheads and profit percentages

-- Fixed prices against which quality can be evaluated

The price mechanism in the framework agreement should allow for best market rates to be obtained throughout the term of the contract and therefore should include:

-- An index for movements in cost – upwards or downwards

-- Flexibility for discounts

-- Options for fixed pricing/cost certainty

-- Opportunities for value management

-- A robust mechanism for approving variations

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It is important that the call-offs, whether awarded directly without re-opening competition or by mini-competition (see supplier selection process on page 10), use the appropriate prices and mechanism in accordance with the framework agreement. This allows prices to be validated.

The appropriate price mechanism may include an electronic tendering facility but it is essential that these are operated in a manner compliant with The Regulations.

Benchmarking Given the restrictions in comparing frameworks, benchmarking between frameworks is very difficult and can be misleading.

Procurers’ differing needs mean that expected standards vary, making like-for-like comparisons hard to achieve.

That is not to say that benchmarking is not possible. Careful analysis of the quality criteria and full project costing can be used to produce a value for money indicator against which continuous improvement can be monitored.

Key performance indicators It is widely acknowledged that the establishment of key performance indicators (KPIs) is an essential component to achieve desired outcomes.

Some frameworks agreements will identify key performance indicators (KPIs) to be applied to all call-off projects and these should be assessed for relevance to your project needs.

In any case, the framework agreement should allow KPIs to be an integral part of any call-off contract. To ensure value for money, KPIs should always include both a quality and price element, reflecting of course the priorities for customer satisfaction.

Frameworks operating with a single supplier Where a framework agreement is concluded with just one provider, contracts – or call-offs – can be made as a direct award. They should be awarded on the basis of the terms laid down in the agreement and may be refined or supplemented by other terms in the framework agreement not agreed at that time.

Please note, there can be no substantial changes to the specification or the terms and conditions agreed at the time that the framework is awarded.

Frameworks operating with multiple suppliers Where frameworks for the same goods, works or services are awarded to several providers, there are three possible options.

LHC’s preferred method is operating multiple supplier framework agreements as this provides competition between suppliers and helps to safeguard quality, price and best value. The options available are listed below:

1. Direct award without reopening competition When all of the terms laid down in the framework agreements are sufficiently precise to cover the particular requirement, contracts may be awarded without reopening competition in the manner described in the framework terms and conditions.

2. Mini-competition (mini–tender) between capable providers When the terms laid down in the framework agreement are not precise or complete enough to enable an award of contract, a mini-competition should be held with all those suppliers within the framework capable of meeting the particular need.

3. Part mini-competition between capable providers and part direct award without reopening competition Even when all the terms laid down in the framework agreements are sufficiently precise to cover the particular requirement, call-off contracts may be awarded partly without and partly (where the framework states which terms may be subject to reopening competition) by reopening competition.

This does not mean that basic terms can be renegotiated, or that the specification used in setting up the framework agreement can be substantively changed. However basic terms can be supplemented or refined to reflect the particular circumstances.

The mini-competition process is often used to award call-off contracts as it provides competition between framework suppliers and helps to maximise best value.

Where a mini-competition is held for a particular call-off, users should invite to tender all the suppliers within the framework agreement capable of meeting the particular need.

The Cabinet Office provides some useful tips on getting the best out of a mini-tender:

-- Do not include any pre-qualification selection criteria that will have already been assessed in the procurement of the framework agreement. Suppliers who have been invited to a framework agreement will already have been through a “selection stage”, which will have assessed their technical ability, financial standing and so on. Matters that have already been assessed during the selection stage must not be re-visited at the award or mini- competition stage. Although tenderers who should have been excluded at framework stage or become subject to exclusion during the course of a framework for reasons set out in the Regulations, must or may be excluded at any time

There are a number of procedures for awarding individual

contracts under framework agreements once a supplier

or short list of supplier companies has been appointed.

How do I select the best supplier companies from the framework?

11

The basic terms of a framework agreement cannot be renegotiated at the call-off stage.

Examples include:

Delivery timescales

Invoicing arrangements

payment profiles

Additional associated services

e.g. installation, maintenance and

training

Mixes of rates and quality

Where the terms include a price

mechanism

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LHC’s preferred method is operating

multiple supplier frameworks as this

provides competition between suppliers.

A mini-competition should involve all

suppliers within the framework agreement

capable of meeting the particular need.

-- Do not direct order when a mini-competition should be used.

-- Do not add terms and conditions outside of the original scope to make substantial amendments to terms and conditions unless modifications are permissible under the regulations and as set out in the framework terms and conditions.

-- Do not add evaluation criteria that are not specified in the framework agreement.

-- Always publicise the weightings of award criteria and sub-criteria used in a mini-competition in the interest of transparency.

-- Ensure that the same information is provided to all the tenderers.

-- Allow suppliers enough time to formulate a bid.

-- It is illegal to create a “framework within a framework” agreement to try and narrow a larger field of suppliers for subsequent call-offs. The outcome of running a mini-competition should be a contract for the delivery of a specific requirement. It is not acceptable to run a mini competition within an established framework agreement with the intention of creating a narrower field of suppliers for future mini- competitions. This would effectively create a subsidiary framework agreement, established without application of the relevant procurement regulations.

Framework providers, like LHC, can offer support services in selecting the best companies from the framework through either management of the award process or validating quality and price submissions.

The framework agreement should allow KPIs to be an integral part of any call-off contract

13

Users of frameworks should be trained in the understanding and operation of call-off contracts and how to follow procedures set out in the framework agreement. There are both practical and legal issues to consider.

Practical issues Good project management techniques apply equally to call-off contracts from a framework as they do for any other project.

-- Use a recognised project management system

-- Identify and assemble project resources – the framework provider may also be able to offer support services

-- Establish robust relationship management systems including the structure and format of supplier review meetings

-- Use a form of contract that fits your project needs – the framework agreement may stipulate the form of contract to be used or propose a defined contract

-- Ensure the contract includes clear KPIs reflecting your desired outcomes, most importantly those relating to value for money and customer satisfaction – there should be a provision for problem resolution resulting from underperformance

If the call-off contract replaces an existing one the transition from the incumbent supplier will have to be managed. It is important that the incumbent supplier understands the procurement process and the reasons for non-appointment on the new contract.

There may be TUPE considerations in any transition. Generally, this issue may not be covered explicitly in most framework agreements but its omission does not preclude the use of the framework for call-off contracts requiring TUPE transfers.

Legal issues The objective with frameworks is to maximise best value through a compliant process. Framework providers may offer support in the following areas:

-- Appoint the chosen supplier(s) in accordance with the processes outlined on page 10 and clearly communicate the reasons for the appointment to all unsuccessful tenderers

-- If the contract value is above the EU threshold level, shown on page 7, apply the ‘standstill’ period (a period of at least ten calendar days following the notification of an award decision) before formally commencing the contract

-- Do not award an abnormally long call-off contract towards the end of the term of a framework agreement – the length of call-offs should be appropriate to the project needs and reflect value for money considerations

Call-off contracts must be entered into before the framework agreement itself has expired. When using a pre-tendered framework, ensure that the administration process recognises that the call-off contract is covered by the terms of the framework agreement (and is therefore compliant). Framework providers should have well-developed systems to allow such an audit trail to be implemented in their organisation.

Using a framework to make a purchase does not alone guarantee

value for money. Effective implementation of a call-off contract is

the best way to maximise value.

How do I maximise the success of the framework?

Framework providers should have

a well-developed system to allow

for an audit trail to be implemented.

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Monitoring performance should occur both during and at the end of the contract.

Monitoring performance during the contract

-- Regular supplier reviews should be undertaken periodically throughout the duration of the contract

-- The performance management process should clearly identify Service Level Requirements, together with the levels and frequency of collection and reporting of each KPI

-- In terms of realising the value for money objective, quality and cost price need regular assessment – this is not always as easy as it sounds but expert advice and support will always be available from the most reputable framework providers

Monitoring quality of product and service delivery

-- Ensure that the supplier understands and is totally committed to delivery of the required specification

-- Identify a pilot scheme to establish a benchmark level of quality of service/installation

-- Undertake regular site visits to ensure that the level of quality is maintained

-- Identify problems early and agree a resolution quickly – do not wait until the end of the contract to resolve problems

Monitoring price and cost

-- Ensure that the supplier understands and is totally committed to the pricing mechanism

-- Ensure that invoices are submitted in accordance with the pricing mechanism

-- Implement a robust process for the approval of variations

Recording of performance Many aspects of the Public Contracts Regulations 2015 require a documented record of performance within call-off contracts and frameworks. Examples of such records include:

-- Cost increases, which may affect declared contract values

-- Persistent performance failures which may be cited in exclusion

-- Permitted modifications to contracts

-- Permitted replacement of companies

-- Termination of contracts

Post contract review A post contract review is essential to ensure that the desired outcomes have been achieved. This includes:

-- A statement of the desired outcomes including all target KPIs

-- A statement of the actual outcomes including all actual KPIs

-- An analysis of the performance of the contract, specifically focusing on negative (and positive) KPI results

-- An assessment of the benchmark criteria and resetting of benchmark levels for continuous improvement

-- An assessment of the performance of the chosen framework supplier

-- An assessment of the chosen framework provider

-- An overall best value statement including value for money and customer satisfaction results

Maximising best value from a pre-tendered framework can be achieved by

establishing, at the beginning of the call-off contract, a clear definition of

quality and price requirements and articulating these as key performance

indicators within the call-off contract itself.

How do I check best value has been achieved?

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Good project management techniques will help to maximise the success of the framework

The EU Directive

-- Directive 2014/24/EU (including Annexes V, X and XIII, referred to, but not published, in PCR 2015)

UK regulations The following regulation can be viewed at www.legislation.gov.uk

-- Public Contracts Regulations 2015 (Statutory Instrument No 2015-102)

Scottish Regulations The following regulations can be viewed at www.legislation.gov.uk

Public Contracts (Scotland) 2012 and Amendment Regulations 2013

-- (Public Contracts (Scotland) 2015 are in consultation stage at the date of publication of this guide)

-- Procurement Reform (Scotland) Act 2014

Government guidance Procurement Policy Notes issued by the Government since 18 January 2011 can be found on the main government website:

https://www.gov.uk/government/collections/procurement-policy-notes

The Government guide to buying through framework agreements and all pre-2011 Procurement Policy Notes can be found in the National Archive online:

http://webarchive.nationalarchives.gov.uk/20110822131357/http://www.ogc.gov.uk/procurement_policy_notes_2010_procurement_policy_notes.asp

Please use the list of references below to find out more detailed

information about the EU directive and relevant legislation for

your part of the United Kingdom.

Where can I find more information?

GUIDANCE FORSenior managers, procurement

specialists and technical experts in public sector organisations

across England, Wales and Scotland

England and Wales enquiries: 01895 274850

Scotland enquiries: 0131 306 0176

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