Procurement Act 2023 Update 4

Procurement Act 2023 Update 4 - What is the role of frameworks and dynamic markets in procurement?

In this update, we look at the changes to frameworks and the introduction of dynamic markets under the new Procurement Act 2023 

What is the role of frameworks and dynamic markets in procurement?

Frameworks are an integral part of the procurement landscape and used with increasing frequency for the award of public contracts. 

They are popular with contracting authorities because they are a useful tool in establishing an ongoing relationship with suppliers through a single tendering process and delivering economies of scale. 

However, it has also long been acknowledged that there have been some notable draw backs:

• Competition for call-off contracts is limited to those suppliers admitted to the framework, limiting the available market for individual opportunities and presenting a barrier to new entrants for the life of each particular framework;
   
• The rules governing the award and form of call-off contracts are generally not well understood or applied which can lead to a lack of compliance;
   
• Direct award procedures may be used inappropriately and to narrow competition; and
   
• There are limited transparency requirements for the award of call-off contracts under the existing framework regime  

Similarly, dynamic purchasing systems under the current rules were also poorly understood and underused. 

The Procurement Act 2023 therefore aims to address these issues, reforming the framework rules and replacing dynamic purchasing systems with dynamic markets.

What are the key changes to frameworks?

Arguably the biggest change under the Procurement Act in this area is the introduction of the new concept of “open frameworks” which attempts to address the issue of their operation limiting the market for certain public contract opportunities.

For the first time, the rules permit contracting authorities to appoint new suppliers to a framework during its life by allowing it to open it up at least twice during its term. Although the maximum duration of a traditional closed framework remains 4 years (unless the nature of the goods and services justifies a longer term), the maximum term for an open framework is now going to be 8 years – so the marketplace created by the framework is wider, available for longer and capable of being refreshed periodically.

The mechanism for calling off from frameworks has also been simplified so a competitive selection procedure (see our previous update for details) must be used unless direct award is clearly provided for. To meet that requirement, the framework must set out the core terms of the call off and prescribe an objective method for supplier selection. 

What about dynamic markets?

Dynamic markets are set up pursuant to s36 of the Procurement Act 2023. 

Whereas frameworks are set up with a single formal procurement procedure to admit a limited number of suppliers on a competed basis and are then static (unless opened up in the case of an open framework), applications for membership of a dynamic market are open throughout their term and there is no limit to the number of suppliers who can be admitted. Conditions for membership must be a proportionate means of ensuring that members have the legal and financial capability to perform contracts awarded by reference to membership of the market and have the technical ability to perform such contracts.

To award contracts to dynamic markets, contracting authorities must  run a competitive flexible procedure. Contracting authorities can limit participation in that procedure to members of the market (who are essentially pre-qualified by their membership) but crucially they do have to publish a tender notice to the market at large so that other suppliers in the marketplace can decide whether they want to apply for membership of the dynamic market in order to be capable of participating in a call-off. 

How have the transparency rules on frameworks and dynamic markets changed?

The transparency rules regarding the award of contracts under frameworks and dynamic markets have also changed substantially to address the lack of information published under the current regime. Once the Procurement Act comes into force, the post-tender requirements for call-offs and contracts awarded via dynamic markets will be brought into line with normal contracts, so contract award notices must be published before the contract is entered into and once it is entered into, a contract details notice also has to be published. 

These reforms are aimed at increasing transparency to stop the over use or abuse of frameworks and bad practice but will increase the administrative burden on authorities. 

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