Wednesday, June 6, 2012

You've Been Framed - The Reality of Framework Agreements

Frameworks are generally poorly understood by Clients and are often not the lucrative cash stream that they initially suggest, unless of course you are one of the chosen few!

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Under EU legislation all contracts from the public sector which are valued above a certain threshold must be published in the Official Journal of the European Union (OJEU, formerly OJEC).  Many OJEU's advertise framework opportunities, and whilst working in Professional Practice, particularly as a Senior Manager I was often involved in preparing framework consultancy submissions.  
A framework agreement is essentially an ‘umbrella agreement’ which sets out the terms under which individual contracts (call-offs) can be made throughout the period of the agreement. Frameworks can vary in duration, however these are typically for a four year period. 
The principle of a framework is to establish and develop long term relationships between Clients, Consultants, Contractors etc. and to work together to achieve continuous improvement. This is measured in different ways, however the overriding objectives would be to improve quality, look for efficiencies and at the same time reduce costs.

An invitation to submit for a framework will only be given once the Client is satisfied that the Contractor or Consultant have the track record and resources needed.  This will be established from information submitted in a Pre-Qualification Questionnaire (PQQ).  The main submission will then require a whole host of different information relating to details of relevant projects, a organisational structure highlighting key personnel, health & safety policy and record, environmental credentials, numerous answers to all sorts of different questions and scenarios and obviously fees that will be charged. After assessment of the documentation and if successful, the Contractor or Consultant will be invited to an interview where eventually the Client will select a number (typically 4 to 6) to appoint to the framework.

Anyone who has prepared documentation for a framework submission, whether as a Contractor or a Consultant will be aware of how much work is involved. Typically, it will take a Senior Manager with administrative support a significant amount of time to pull the information discussed above, together.  When you consider the hourly rate of a Senior Manager and support staff, together with the bulky printing and preparation of the documentation, the whole exercise is a real cost to a business, and is completed on the principle that if successful, there will be a continuous flow of projects for the duration of the framework.  This however is rarely the outcome.

The initial euphoria of receiving confirmation of an appointment to a framework is often quickly tempered with frustration.  In reality what tends to happen is that a Client will call off work disproportionately, with some on the framework being allocated a high percentage of projects and others being allocated very little. One factor that may contribute to this is the mandatory nature of the OJEU procedure which many Clients do not really want.  Having this procedure imposed on them means that they can no longer just invite those Contractors and Consultants who they have probably worked with for many years, to tender for the framework, in fact by advertising through OJEU they are actually inviting submissions from all over Europe, not just the UK.  Obviously, these 'familiar' Contractors and Consultants can tender for the framework, but will have to go through the same selection criteria as everyone else who applies.

I can think of a number of examples where my company (property consultants), were appointed onto frameworks, having attended numerous meetings, passed the submission and selection procedure, and then not given anywhere near the volume of work to justify the costs.  Clients do not always appreciate that part of the fee calculation is based upon the likely value of work that will be allocated through the framework. Therefore, a much more competitive fee can be included if projects of a reasonable value are called off to your company. Clients who 'throw you the scraps from the table', by allocating the odd small project here and there, do not appreciate that the fee that has been submitted will not work for this extremely low volume of work, however the fee is expected to honored because this is what was tendered with the original submission.

There are two particular frameworks which come to mind, one with a Local Authority in the Midlands and one with a Housing Group in the North West, where my company were appointed onto the Framework, and when attending monthly framework meetings (which again is another cost to the business), it was clear that bulk of projects were being called off to the Consultants who had worked with the Client for many years. This was totally unacceptable, and despite some 'honest and frank' discussions with the Client, nothing changed.  I am sure that this will be the same in certain situations for Contractors.  Consequently, my company took a commercial decision to be much more selective of which frameworks to apply for in the future.  

Frameworks are generally poorly understood by Clients and are often not the lucrative cash stream that they initially suggest, unless of course you are one of the chosen few!

Information/opinions posted on this site are the personal views of the author and should not be relied upon by any person or any third party without first seeking further professional advice.

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