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Peter Bennett Framework Agreements The new EC directive – policy, implementation and impact

Peter Bennett Framework Agreements The new EC directive – policy, implementation and impact. Office of Government Commerce. An office of the Treasury Set up on 1 April 2000 in the light of Peter Gershon’s report on civil central procurement

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Peter Bennett Framework Agreements The new EC directive – policy, implementation and impact

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  1. Peter BennettFramework AgreementsThe new EC directive – policy, implementation and impact

  2. Office of Government Commerce • An office of the Treasury • Set up on 1 April 2000 in the light of Peter Gershon’s report on civil central procurement • Brought together: Treasury Procurement Group; The Buying Agency; CCTA; PACE

  3. Procurement Policy Unit • Domestic Procurement Policy • Implementation and application of EC and International Procurement Rules • EC and International Developments in procurement (report to DTI)

  4. Current EC procurement rules • Treaty • Procurement directives (earliest 1971) - Supplies; Services; Works; Utilities; Remedies - based on principles of transparency, non- discrimination and competitive procurement - detailed rules on specifications, selection and award • Implementation in UK by Regulations under Section 2.2 of the European Communities Act 1972

  5. EC Developments • Communication on Public Procurement set out ideas for simplifying, clarifying and updating existing directives - 1998 • Commission proposals - July 2000 • Political agreement - May 2002 • European Parliament voted on amendments - 2 July 2003 (Second Reading) • Conciliation, followed by adoption - late 2003/early 2004 • 21 months to implement in Member State

  6. Specific changes in the new directive • Three previous directives - supplies, works, services - brought together • Provision on framework agreements for the first time • New provisions on electronic systems (e-auctions and dynamic purchasing systems) • New competitive dialogue procedure • Clarification on scope to reflect social and environmental issues

  7. What does this mean for frameworks?Current Position • Definition: a general term for agreements with suppliers which set out terms and conditions under which specific purchases (call-offs) can be made during the period of agreement • The agreement can itself be a contract as defined by the EC directives • Normally not the case – contract formed (in EC terms) at call-off stage

  8. Such agreements not reflected in current directives, but UK treated them as “contracts” for EC purposes – advertising requirements in OJEC to cover future call-offs • Commission expressed concerns – particularly on possibility to negotiate terms at call-off stage. • Departments reminded of Commission concerns and of how frameworks should be treated under EC rules • UK continued to make use of them, on good practice grounds, while seeking to ensure new directive reflected UK approach

  9. New Article 32 • An explicit provision on framework agreements for the first time • Covers frameworks for goods, services and works - important • Explains that normal rules in the Directives should be followed up to award of framework – including the need to advertise framework in OJEU. Specific rules then apply to call-offs. • Framework should not exceed four years - save in exceptional circumstances. But call-offs already awarded can continue beyond the four-year limit • Frameworks can be concluded with one or several suppliers. In the latter case, there must be at least three

  10. Call-Offs • If there is only one supplier in framework, call-offs are awarded within the agreed terms, supplemented as necessary • If three or more, call-offs awarded by either: a) application of terms without reopening competition – if sufficiently precise b) where not all the terms are precise enough, by holding mini competition with all suppliers capable of executing the subject of the call-off • In all cases, award of call-off on basis of most economically advantageous offer, based on the weighted award criteria set out in the framework

  11. Applying the new Article • New directive unlikely to be implemented in UK before 2005 • However, Article 32 is simply clarifying how existing EC principles apply to frameworks • So can take advantage of the clarification now - for new frameworks to be awarded - don’t need to await implementation. (Existing frameworks unaffected) • By doing so, can ensure that frameworks are awarded and operated in line with EC rules • Two substantive changes to current approach – four year limit and weighting of award criteria

  12. Implications for current practice? • Q. Mini-competitions now mandatory? • A. No – only where supplementing terms/conditions • Q. All framework suppliers must be invited? • A. No – only those capable of executing the subject of the call-off.

  13. Conclusion • Framework agreements can be - and are being - used now • New directive makes clear how they square with EC rules • Very helpful that new directive should not require change to current practice – except four year rule and, in some cases, approach to categorisation • Approach set out in directive can be applied now – no need to wait for implementation • OGC has issued guidance on website: www.ogc.gov.uk - (look under “Procurement policy and EC rules”)

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