EU public procurement training in Lovech, TAIEX project. Framework agreements.

1. Framework agreements
Application of framework contracts. Benefits
for the supplier and the contracting authority
November 9, 2009. Lovech, Bulgaria
ANDRIUS ŠIAUDINIS, M. A. JUR.
PPP ASSOCIATION - LITHUANIA
Public Private Partnership Association - Lithuania

2. Framework agreements
Is it a new thing?
Legal framework
General rules
Benefits and risks
Models of the framework agreements
Case study of the centralized purchasing under the
framework agreements

3. Is it a new thing?
The “old” procurement regime had no provisions on
framework agreements
The “grey” area gave a chance for uncertainty
It was used in practice!
Much uncertainty in regard to agreements with more
than one supplier
Different practices in the EU MS

4. Is it a new thing?

5. Legal framework (EU level)
Legal documents:
Directive 2004/18/EC “Classic Directive”
Directive 2004/17/EC “Utilities Directive”
Explanatory documents:
“Explanatory note – framework agreements – classic
directive”, Commission European, Directorate
General Internal Market and Services

6. Legal framework (EU level)
Directive 2004/18/EC:
“an agreement between one or more contracting authorities and one or
more economic operators, the purpose of which is to establish the
terms governing contracts to be awarded during a given period, in
particular with regard to price and, where appropriate, the quantity
envisaged”
Directive 2004/17/EC:
“an agreement between one or more contracting entities referred to in
Article 2(2) and one or more economic operators, the purpose of which
is to establish the terms governing contracts to be awarded during a
given period, in particular with regard to price and, where appropriate,
the quantities envisaged”

7. Legal framework (national level)
Bulgarian Public Procurement Law:
Article 93a. (1) A “framework agreement” shall be an agreement
concluded between one or more contracting authority and one or more
potential suppliers, contractors or service providers of public
procurement contracts, whereof the purpose is to pre-establish the
terms, governing the contracts which the parties intend to conclude
during a given period not longer than four years, including with regard
to the prices and, where possible, the quantity envisaged.

8. Basic general rules
 Setting up of a framework agreement must not hinder or
distort competition
 Framework agreement may be used only by original
parties
 Maximum duration is 4 years (exceptional cases allow
longer term)
 “Call offs” may extend beyond the life of the framework
 The establishment of the framework agreement follows the
normal procurement procedures (e.g. open or
restricted procedure)

9. Benefits
Benefits for contracting authority:
 Time saving tool (just one procedure)
 Greater quantity (better price)
 Bigger contracts and share of risks (security of supply)
 Flexibility (adaptation to markets technical and financial evolution):
possibility to buy products as the need appears and possibility to re-
open competition in order to award orders or contracts
Benefits for the supplier:
 No need to prepare numerous proposals
 Reacting to the market changes (renewed proposal)

10. Risks
Problems:
 bigger contracts
 some centralisation
 risk of captive contracts
 more complicated for contracting authorities
 reduced access of SMEs

11. Models

12. Single Supplier Framework Agreement
When all terms are established:
 Conclusion of the framework agreement follows the normal procedures
 Parties MUST stick to the terms of the original agreement
 The proposal for winning the framework agreement cannot be changed
When not all terms are established:
 Conclusion of the framework agreement follows the normal procedures
 Parties CAN agree the concrete terms for the special “order” following
the rules described in the framework agreement
 Possibility to make necessary supplements to the initial proposal after
consultation in writing

13. Multiple Framework Agreement
When all terms are established (without reopening competition):
 All terms are fixed
 No need or possibility to reopen competition
 The award procedure must be described in the agreement and follow
general principles (i.e. cascade model)
When not all terms are established (reopening competition):
 The suppliers are notified of the additional conditions
 Reopening competition must be done in writing
 Suppliers send new offer
 Award takes place according to the award criteria stated in the
framework agreement

14. Lithuanian case study
Framework agreements
in centralized purchasing
Central Project Management
Agency, Lithuania www.cpo.lt
Purchased products under
the multiple framework
agreements with
reopening competition:
 Computer and office equipment
 Stationery and office supplies
 Fuel in filling stations
 Mobile telecommunication services

15. Lithuanian case study
Framework agreement (FA)
for computers:
 Open procedure
 FA signed with 12 suppliers
 E-catalogue
 E-ordering
 Reopening mini competition
 Lowest renewed price wins

16. Useful links
http://ec.europa.eu/internal_market/publicprocure
ment/docs/explan-notes/classic-dir-
framework_en.pdf
www.ogc.gov.uk/documents/guide_framework_agr
eements.pdf
http://ec.europa.eu/internal_market/publicprocure
ment

17. Questions?
?

18. Public Private Partnership Association - Lithuania
A. Gostauto 40a, Vilnius, Lithuania
T +370 5 2100 000
F +370 5 2784 389
3p@3p.lt
www.3p.lt