Presentation by Daniel Ivarsson, SIGMA expert (ENG) Second SIGMA Regional ENP East Conference on Public Procurement, Kyiv 29-30 May 2018

1. © OECD
Forthcoming SIGMA Paper:
Implementation of framework
agreements in the EU
Daniel Ivarsson, SIGMA expert, Sweden
Kyiv, 30 May 2018

2. Topics covered
• Nature and purpose
• Operations
• SIGMA Paper
• Lessons learned
2

3. Framework agreement
Agreement between:
- one or more contracting entities; and
- one or more economic operators,
with the purpose to establish the terms
governing contracts to be awarded during a
given period, in particular the terms as to
price and, where appropriate, the quantity
envisaged 3

4. Regulatory framework
• EU Directives
 Directive 2014/24/EU, recitals 57, 60-62,
71
 Directive 2014/24/EU, Article 33
• Case law of the Court of Justice of the
European Union
• National legislation
• Other regulations
4

5. One contracting authority, one
or more economic operators
Contracting
Authority
Vendor
Contracting
Authority
Vendor
Vendor
Vendor

6. Several contracting authorities
one economic operator
Contracting
Authority
VendorContracting
Authority
Contracting
Authority

7. Several contracting authorities
several economic operators
Vendor
Vendor
Vendor
Contracting
Authority
Contracting
Authority
Contracting
Authority
Vendor
Vendor
Contracting
Authority

8. Fields of application
 Repeated requirements for standard items
– Standard equipment, office supplies,
consumables
– Standardised services (maintenance, cleaning)
– IT or other technical support services
 Uncertainty about total quantities
– Foreseeable needs for urgent action (snow
clearing, . .)
8

9. Advantages I
• Flexibility to purchase goods or services
covered by that framework agreement
• The conclusion of the subsequent
contracts is greatly simplified and can
be performed more quickly than by
using a “normal” tender procedure
• Increased competition through call-
offs/mini-competitions

10. Advantages II
• Useful tool for avoiding the abusive way
in which certain situations are wrongly
set in the urgent needs category, thus
forcing the use of direct purchasing
• Greater opportunities for SME
participation – potential for better
value for money
• Contracts adaptable to rapidly changing
market conditions (IT products; fuel or
energy; foodstuffs)

11. Operations
• Award of the framework agreements
themselves
• Award of contracts under framework
agreements (through a call-off mechanism)
11

12. Overview of main steps I
• Determine needs and approach; aggregate
• Advertise / invite tenders
• Standard procedures for selection & award
• Open, restricted, negotiated; competitive dialogue
• Conclude agreement with one/several contractors
• Agreement governs the way contracts are
awarded under the framework, conditions of
contract, duration (max. 4 years)

13. Overview of main steps II
• Call off deliveries as needed
 If there are several contractors, a secondary
competition (“mini-competition”) may be used
each time a contract is awarded under the
framework
 No subsequent changes to the terms and
conditions of the framework agreement
• Check deliveries; pay invoices
• Monitor use, especially if several contracting
authorities
• Evaluate outcomes; adjust approach; prepare
follow-up framework agreement

14. Lessons learned: typical issues
 Suitability of a framework agreement vs. a
traditional public contract
 Planning and preparations are vital
 Carefully analyse type of framework agreement
and call-off procedure to use
 Choice of procedure, criteria and tender
evaluation methodology is important
 Market concentration and SMEs
 Duration of the framework agreement

15. Important reminders
• Strong structuring effects on the market
• Beware of tendency to use framework
agreements in areas where they are not at
all suitable
• Before moving ahead with preparing a
framework agreement, consider seriously
whether it would indeed be most suitable
for the procurement in question
15

16. Forthcoming SIGMA Paper
• Complement to SIGMA Paper 47
Centralised Purchasing Systems in the EU
• Good examples, lessons learned from EU
practice of using framework agreements
• Comparative data, gaps to be filled
• Help introduce the use of framework
agreements, guide their improvement
16

17. SIGMA Paper main parts
• Basic definitions and concepts
• Legal framework
• Framework agreements step by step
• Specific, related topics
• Framework agreements in the EU
• Conclusions and recommendations
• Award and use in selected EU member
countries
17

18. Basic definitions and concepts
• Characteristics
• Rationale
• Institutional arrangements
• Challenges and risks
• Risk management
18

19. Legal framework
• Legal framework
 Concept
 Definition
 Parties
 Award
• Related procurement instruments
 E-procurement, e-auctions
 Dynamic purchasing systems (DPS)
 E-catalogues
19

20. FAs step by step
• Planning and award of FAs
 Approach, structuring, market interactions
 Specifications, selection & award criteria
 Tendering, evaluation, conclusion of FA
• Execution of FAs
 Client and supplier relations
 Call-off procedures and management
 Monitoring, termination, renewal
20

21. Specific topics related to FAs
• E-technology, e-auctions, DPS
• Horizontal policies: social, environmental
• Market and competition aspects
• Framework agreements in the EU
• Complaints review and integrity
21

22. Framework agreements in the EU
• Data from EU statistics
• Frequency of use, application areas
• Procedures, criteria, number of suppliers
• Categories, duration, value
• Data from questionnaire to EU members
 Same as above, plus:
 Complaints; service fees
 Organisation; related activities
22

23. Framework agreements in the EU
• Data from EU statistics
• Frequency of use, application areas
• Procedures, criteria, number of suppliers
• Categories, duration, value
• Data from questionnaire to EU members
 Same as above, plus:
 Complaints; service fees
 Organisation; related activities
23

24. Conclusions, recommendations
• Lessons learned
• Choice of FA type and call-off mechanisms
• Complement or alternative to DPS
• Risk and success factors, suggested priorities
• Recommendations on the way forward
• Analysis, strategy, action plan
• Primary & secondary legislation, guidelines
• CPB creation, capacity building for users
• IT infrastructure, pilot projects; evaluation, roll-
out
24

25. Award, use in selected countries
• Selection of representative countries
• Field visits, meetings with all concerned
• Austria
• Croatia
• Ireland
• Portugal
• Sweden
25

26. Austria: main characteristics
• Public procurement system
 Federal law used above and below EU thresholds;
high national ones, direct agreement OK below
 Complaints review at federal and province level
• Use of framework agreements
 Centralised purchasing body: BBG, FA use
mandatory for federal bodies, others free to use
 All BBG framework agreements on “e-shop”
 Estimated amount is also the maximum allowed
 Framework agreements oblige suppliers to deliver
and to participate in mini-tendering
26

27. Austria: results, lessons learned
• Advantages: better value for money; no
obligation to purchase; standardisation
• Risks: monopolisation, lock-in effects; high
share of large firms, single-supplier FAs
• Issues: incorrect use; need to improve
planning, build staff capacity
• Decent participation rate: 4-5 per tender
• Interest in cross-border FAs but no success
27

28. Croatia: main characteristics
• Public procurement system
 Law applies above and below EU thresholds;
simpler procedures below them
 National complaints review body; many
complaints, especially on FA tenders
• Use of framework agreements
 CPB: Central Procurement Office; mandatory FA
use for gov't entities; others not allowed to use
 FAs: 40% of all procurement, more above EU
thresholds; still mostly single-supplier; most
frequent award criterion: lowest price (>90%);
estimated amount is also the maximum allowed
28

29. Croatia: results, lessons learned
• Advantages, disadvantages: like Austria
• Single-supplier FAs frequent, similar to
traditional contracts: FA flexibility ignored
• Multi-supplier FAs with all conditions set,
mini-tendering rarely used
• Mandatory public consultation on draft
tender documentation for FAs
• SME participation not an issue, but weak
competition: participation rate: 3.2 per
tender 29

30. Ireland: main characteristics
• Public procurement system
 Procurement regulations above EU thresholds;
below them: government policy and guidelines
 Complaints above thresholds reviewed in court;
infrequently used, informal alternative exists
• Use of framework agreements
 CPB: Office of Government Procurement (OGP) +
four CPBs: health, education, defence, local gov't
 High FA share in goods and services, rising trend
 Pre-set conditions instead of mini-tendering
 Estimated amount not a compulsory ceiling 30

31. Ireland: results, lessons learned
• Focus: efficiency, savings, value for money
• E-procurement established, developing
• Pre-commercial consultations frequent
• SMEs a focus, but medium firms dominate
• Competition strong but few firms in infra-
structure and IT
• Horizontal issues: business development,
innovation, new approaches
31

32. Portugal: main characteristics
• Public procurement system
 Law applies above and below EU thresholds;
formal decentralisation, actual centralisation
 Two-instance court review of complaints; few
• Use of framework agreements
 CPB: eSPap; also provides administrative services
 eSPap mandatory for State, used also by others
 Interministerial advisory group on policies
 Many authorities for each FA; co-ordination issues
 Estimated amount not a compulsory ceiling
32

33. Portugal: results, lessons learned
• Advantages, disadvantages: like Austria
• E-procurement mandatory, also for call-offs
• All FAs multi-supplier with mini-tendering
• System of reference prices: itemised ceiling
prices, must not be exceeded in call-offs
• Obligation to participate in mini-tendering
• High participation levels; SME participation
policy issue only, not in practice
• Concerns about lack of dynamism
33

34. Sweden: main characteristics
• Public procurement system
 Law applies above and below EU thresholds
 Local and regional authorities dominate
 Court review of complaints; many of them
Use of framework agreements
 Long FA tradition, high use, except for works
 National, regional, local CPBs; joint procurement
also very frequent
 No public portal for notices; private operator used
 Estimated value not a ceiling
34

35. Sweden: results, lessons learned
• Advantages: economy, efficiency, relations
• Concerns: lock-in, loss of CA competence,
need to compromise on requirements
• Late with e-procurement; no e-auctions
• Horizontal policies: environment, social,
SMEs; concerns about market structuring
• High participation, high success rates - does
this mean strong competition?
• DPS seen to replace FAs
35