Understanding procurement terminology, particularly in current times, is important to your assessment of the potential tenders and bids that might be right for your business to pursue. In this blog we are focussing on the distinctions between Frameworks, Dynamic Purchasing Systems and Contracts, in addition to clarifying the use of RFIs.
It is important that businesses understand the opportunities and alerts that they are receiving, so that they invest their resources and efforts in opportunities that match their bid strategy.
A key point to understand regarding frameworks and dynamic purchasing systems (DPS) is that they may not bring your business any contracts or spend. Frameworks and DPS tenders put in place a mechanism for buyers/purchasers/authorities to purchase goods and services in compliance with their own purchasing regulations, and/or in compliance with national/legal requirements, such as the Public Contract Regulations.
A framework is regarded as an overarching agreement between buying and supplying parties which outlines the principles under which contracts can be placed. The framework operates as a general ‘umbrella agreement’ that sets out the terms under which individual contracts can be made throughout the period of the framework. It is typical for framework agreements to operate with numerous buyers and numerous suppliers. Single suppliers or multiple suppliers may therefore be awarded a place on frameworks.
Initial specifications and requirements outlined in a framework tender may be high level. Where this is the case, when you take part in mini competitions under the framework,you are likely to receive more detailed information on the customer’s specification and requirements.
A framework has a single point of entry, at the time the framework is tendered. The supplier and customer list remains fixed for the duration of the framework.
Dynamic Purchasing System
A Dynamic Purchasing System operates in a similar way to a framework, as it is an overarching agreement between buyers and suppliers, that facilities the purchase of goods and services. As with frameworks, mini-competitions for specific requirements are conducted in order to form a contract between buyer and supplier. DPS mini competitions are conducted by electronic means.
However the DPS differs in that it is “live” for its duration. Throughout the term of the DPS, new suppliers can be added to the DPS, providing that the pass the selection criteria and requirements set by the purchasing authority running the DPS. Furthermore, if a supplier tenders for a place on a DPS and is unsuccessful, they are usually able to tender again after a period of time, providing that they have resolved the issue that prevented their initial acceptance.
Entry onto a DPS tends to be through high level selection criteria, in addition tomandatory and discretionary questions. More detailed requirements and specifications are released at mini competition stage.
As a DPS is live, it enables new entrants to a marketplace to join and be in a position to compete for contracts.
A contract tender is an intention from the buying organisation to purchase the goods or services that they are out to tender for. However, it must be noted that many contract tenders will have a disclaimer that reserves their right not to award, or to place any orders against the resultant contract. A tender that is advertised as a contract for the provision of XYZ goods/services, can generally be considered to be a contract that will result in orders for the goods or services that are the subject of the tender specification.
As buyers try to better understand the supply chains available to them, they may issue an RFI – a Request for Information. When considering an RFI, scrutinise it carefully. Is there an intention for that organisation to go out to market and run a procurement? If so, do you want to be part of that procurement or tender opportunity? Completing an RFI can put you on a buyers radar and help you understand them and their journey to procurement better – this may inform better bid planning when you come to tender to them. Whilst we encourage participation in RFIs for these reasons, it is worth noting that an RFI exercise in itself is not a commitment to buy.
Whether you are assessing opportunities for DPSs, frameworks, or RFIs, if your resources are stretched, make sure you are targeting the correct opportunities to progress. If you need additional resource to support your tendering please do give us a call!