National framework agreements were designed to take the time, cost and pain out of local government purchasing. They do away with the need to go out to tender individually, leave the ‘heavy lifting’ to expert negotiators, and enable councils to focus their procurement resources on big strategic projects. And demand aggregation means greater purchasing leverage beyond what any single council – even a large one – could achieve on its own.
Frameworks have come under a lot of fire in recent years but some of the major gripes are now starting to be addressed.
The first point is that once a framework is in place there are often no escalation procedures or entities for buyers to appeal to when problems arise. When accessing a framework, buyers should ensure that appropriate contract and supplier management processes have been established. This is all part of ‘end-to-end category management’, and is becoming increasingly common in public sector procurement.
Another key criticism is that frameworks have not always achieved best value. They are traditionally set up without any specific spending commitments. Clearly suppliers cannot offer maximum discounts if they have to hedge against uncertain sales volumes. When evaluating a framework agreement, buyers should therefore look for evidence of committed spend. Again, this is increasingly general practice in public sector frameworks.
Linked to the value debate is the fact that, once an agreement has been established, it becomes a closed system. No suppliers can be added or removed. With frameworks lasting around four years, this can leave councils exposed when a supplier fails to deliver or goes out of business. It also builds high entry barriers. New market entrants may offer better, cheaper packages, but they remain locked out for the duration of the agreement.
An end to this uncompetitive approach is looming, with the introduction of dynamic purchasing systems (DPS). This is an electronic tool for setting up and maintaining a list of providers of commonly purchased goods and services. Unlike traditional, static frameworks, new suppliers can be added to the DPS at any time, and existing vendors can revise their indicative tender documentation. Less work is required for suppliers to be added to the DPS, making it easier for smaller businesses to tap into the local government market.
While frameworks have a strong role to play as councils face up to the realities of the Localism Bill, they are only one element in the buyer’s toolkit. In many areas local expertise will become even more critical to ensure the right decisions are made for local service users.
☛Paul Smith is director, procurement and supply chain at Pro5