The Procurement Act launch date of 24 February is fast approaching
Understanding the changes is key to inform future procurement decisions.
What are the differences?
A DPS is similar to a procurement framework in that it provides public sector buyers with a pre-approved list of suppliers from which to call off contracts. However, unlike frameworks, suppliers can join a DPS at any point and aren’t restricted to a four year lifespan. The process of joining a DPS is completed entirely digitally, which is less resource intensive in comparison to frameworks.
This means DPSs offer greater flexibility and accessibility than frameworks for new start-ups and small to medium-sized enterprises (SME). This is why contracting authorities tend to favour establishing DPSs when seeking locally based suppliers for routine, ‘off-the-shelf’ products and services, rather than turning to national providers. DPSs are also favoured from a contracting authority perspective due to the savings that can be achieved, with certainty that the suppliers who are on the framework have met the requirements.
Under the current regime, frameworks are agreements established between one or more public sector buyer and one or more pre-approved supplier, who will provide a set of services and/or products.
Framework agreements typically last up to four years and can be used by public sector buyers to ‘call off’ new contracts without the need for an open tender process. This speeds up the procurement process for buyers by limiting the pool of potential bidders to a pre-approved list. For suppliers, getting on a framework opens up the opportunity to bid on contracts that cannot be bid on by companies that are not party to the agreement.
In 2023, a quarter of the total value of government contracts was awarded via frameworks (26%), up from just 11% in 2018. The biggest increase in framework use has been in the NHS, which shot up from 2% to 25% over this period.
What are the changes to a DPS?
Under the Procurement Act, DPSs are being replaced by dynamic markets. Where a DPS is used to facilitate procurement of specific goods and services (namely commonly used ‘off-the-shelf’ purchases), the dynamic market can be used for all types of goods, services and works. It remains a pre-qualification tool to create a ready pool of bidders before going out to tender for new work. There is no limit to the maximum number of suppliers who can join a dynamic market.
he introduction of dynamic markets provides positive opportunities for more procurement options and a quicker route to market. When a dynamic market has been identified as the most suitable route to market, companies can use this to save time completing supplier checks.
What are the changes to frameworks?
The Procurement Act will bring some subtle changes to frameworks, the most notable being the introduction of open and closed frameworks.
Open frameworks
From 24 February 2025, contracting authorities will have the ability to procure through ‘open frameworks’, which will bridge the gap between traditional framework agreements and dynamic markets. Like regular frameworks, prospective suppliers may bid to join the framework agreement before the framework start date.
Unlike traditional closed frameworks, contracting authorities will be permitted to appoint new suppliers to the framework during its lifetime. This means the frameworks may be ‘opened up’ at least twice while they are already live. Open frameworks will also be permitted to run for up to eight years – twice the length of most traditional framework agreements.
This new framework type aims to improve flexibility and facilitate a more competitive market. By providing suppliers with multiple opportunities to join during its lifetime, there is less risk of open frameworks excluding smaller and newer suppliers. The hope is that this will make it easier for contracting authorities to use frameworks to procure from SMEs.
Changes to the call-off process
The Procurement Act will simplify the process for awarding call-offs via all framework types. Contracts awarded via a framework agreement can currently be awarded either through mini competitions or a direct award, which will remain the same. However, following implementation of the Procurement Act, contracting authorities may only award a contract directly if the framework sets out the core terms of the contract and an objective mechanism for supplier selection. “Core terms” replaces “all the terms governing the provision of the works, services and supplies concerned”, which appears in the current procurement regulation, better reflecting the way frameworks are used. It is hoped this change will add clarity and improve the ease of awarding contracts directly for contracting authorities where necessary.
Call-off information and framework notices
Currently, contracting authorities are only obligated to publish limited information about contracts awarded under framework agreements. While Cabinet Office guidance recommends the publication of further information, this is not a legal requirement. Some claim this lack of information around call-off contracts has undermined transparency and public trust in procurement frameworks, leading to potentially non-competitive call-off processes.
The Procurement Act will change this by requiring government bodies to publish a broader range of information through ‘framework notices’. All contracts will be subject to the same new-style ‘contract award notices’, which will include details of both the successful and unsuccessful tenderers.
What will happen to existing frameworks?
There will be a period of dual running while the new Act is introduced. Any frameworks and associated contracts set up now will run under the current regime to provide certainty and there will be no change to regimes mid-way through the contract.
Any DPS and qualification system established under the previous legislation must come to an end as set out when they were established, or by 24 February 2029 (four years after the new regime comes into effect), whichever is earlier.
What does this mean for procurement?
If used, open frameworks could provide an alternative route for public sector procurement teams and afford greater opportunities to new businesses than traditional framework agreements. They may facilitate a more competitive landscape and lead to fewer SMEs being locked out of the market.
Suppliers may be on the lookout for new dynamic markets once the Act goes live, as they represent a new, accessible way to facilitate winning work in the public sector. For SMEs in particular, they are a great way to get a foothold in the public sector marketplace.