3 Different Types of Agreements Used By The Public Sector

The public sector uses a number of different agreements when contracting with suppliers.  Some of these make it much easier for solo and small business owners to become suppliers to the public sector. 

The first of these is a single supplier contract.  This is used when the buyer knows the quantity of product (goods, services and works) and over how long they require them.  So for example, Authority X wants to purchase 50 bottles of hand sanitiser every month for the next 2 years. 

In some cases, the buyer knows that they have a need, which may be on a repetitive basis.  However, they might not fully understand the full extent of what they require to purchase.  For example:

·         How long the need will last

·         How many suppliers may be required to provide a solution.

In this case the buyer may publish a Framework Agreement, either on its own or in collaboration with other buyers.  This is an arrangement where a buyer selects suppliers and sets the terms and prices for a period in advance (often up to 4 years in the future), select suppliers and then calls on those suppliers to deliver the specification when required. 

Framework agreements are commonly set up to purchase products required on a routine basis like:

·         Construction

·         Maintenance

·         Various forms of consultancy

·         Office and IT supplies

·         Facilities operations and so on.

There is never a guarantee of work even if you are part of a Framework Agreement.  However, being awarded a place on a framework is a sign to others that your business is a key player within your industry.   

The third type of agreement we’re looking at is a Dynamic Purchasing System.  This is very similar to a framework agreement with some key differences.  We’ve outlined these below:

Dynamic Purchasing System

  • Suppliers can join at any time

  • No direct award of contracts - all suppliers who have been successfully placed on the Dynamic Purchasing System are invited to apply for each contract.

  • Pricing is determined at contract award stage

  • Unlimited suppliers may join

Framework

  • Suppliers can join within a limited application window. This will normally be at the initial tender stage and will normally be within a 4 - 6 week window.

  • Buyers can direct award from the framework (sometimes)

  • Pricing is fixed at the point of tender for the term of the tender.

  • The number of suppliers is decided before the procurement.

The increasing use of framework agreements and dynamic purchasing systems are opening the market to solo and small business owners. 

If you are interested in exploring how you can position your business to sell to the public sector then get in touch for a no obligation chat. 

Shiona Campbell