This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In December 2011, the General Assembly of the United Nations ratified the 2011 edition of the United Nations Commission on International Trade Law Model Law on Public Procurement (UN Model Procurement Law). The updated UN Model Procurement Law replaced the 1994 edition and contained some notable updates, including the recognition of the use of master agreement arrangements, also known as Framework Agreements, and the provision of detailed protocols for the creation and use of master agreements with multiple assignments.
The updated UN Model Procurement Law recognizes both closed Framework Agreements (using a limited number of prequalified suppliers for a finite number of years), as well as open Framework Agreements (which are indefinite in duration and therefore require more robust refresh protocols to allow new suppliers into the arrangement). In both instances, Framework Agreements involve the pre-screening of suppliers based on predetermined qualification criteria. Each pre-screened supplier enters into a master standing agreement with the purchasing institution, thereby establishing the general terms and conditions that will govern any future work assignments. As specific needs arise, those prequalified suppliers can be called upon in a relatively short timeframe to perform discrete work assignments awarded pursuant to invitational second-stage selection processes.
Framework Agreements can be established through the following four steps:
Figure 10 – Dynamic Purchasing System
- Automated Supplier Gating System
To reduce unnecessary duplication, the co-ordinating purchasing institution should implement an automated supplier registration process to collect basic supplier background information. This should be left open so that new suppliers can register at any time.
- Streamed Prequalification Process
Suppliers that register in a specific category (e.g. consulting services) can then be invited to participate in prequalification processes for specific sub-categories (e.g. engineering consulting services) within that general category based on prequalification criteria applicable to that sub-category. These prequalification processes should be re-opened on a regular basis.
- Executed Framework Agreements
Suppliers that meet the prequalification criteria for a specific sub-category can then be invited to enter into framework agreements that contain second-stage competitive protocols governing the selection processes for awarding discrete assignments. These second-stage procedures could include pre-established right-of-first refusal rotational awards through the prequalified list for lower-value assignments and invitational simplified bidding procedures for larger-value assignments.
- Enabled Compliant Call-Up Process
To enable awards under the Framework Agreements by participating departments or organizations, the co-ordinating institution should use automated, second-stage processes that could include electronic invitations to prequalified suppliers, electronic supplier submissions, electronic evaluation platforms for technical scoring, electronic reverse auctions platforms for price evaluations, and digital signature protocols for awarding the second-stage call-up assignments.
Future Considerations
By leveraging technology platforms, open framework agreements allow for a one-time prequalification process and the maintenance of permanent supplier lists that can be refreshed over time to ensure that new entrants are not blocked out of future opportunities. This avoids the barriers and duplication associated with closed framework agreements, which require organizations to re-establish their roster at the end of the specific, finite term and places an unnecessary burden on already qualified suppliers to re-qualify.
