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Oxygen Finance

How public sector frameworks work, why they’re going to change, and how we’re about to make them far more visible

Frameworks are a crucial part of public procurement that are only growing in popularity, which is being recognised through the introduction of a new frameworks feature on Insights. We sat down with Oxygen’s Chris Williamson to discuss the importance of frameworks and the value of getting a “behind closed doors” understanding of how they work.

 

Why frameworks have become so popular

Frameworks function as a preferred supplier list that enables the buyer to approach suppliers as and when they need them. When establishing a framework, the buyer goes out to market through a normal tendering exercise, typically including several related services divided into lots. Suppliers are then usually approached through either a direct award or a mini competition, in which suppliers on the relevant lot are invited to submit a bid for a specific job.

As a result, frameworks have become a versatile way for buyers to contract services in areas where they do not necessarily know what level or amount of service they are going to need. By comparison, a direct contracting relationship is a more inflexible arrangement that can take a long time to complete, as well as being less suited in certain areas.

 

The big benefits for buyers

The key benefits of frameworks for buyers are the flexibility they grant and the knowledge that there are vetted and verified suppliers that can be called upon when they need them.

It can be as simple as making a call, completing a call-off document or run a much shortened competition period than a full tender process which, as Chris pointed out, “isn’t good for taxpayers and isn’t good for service users, and the key thing for Councils is minimising the impact on those groups.”

Chris used the example of disaster relief, describing how a Council cannot wait three months to go through a procurement process and find a supplier to manage flooding, but if they have a framework in place then they can pick a pre-approved supplier on short notice.

 

Frameworks can showcase your solutions

For businesses, Chris stated that frameworks are a great place to trade and “a very easy way to showcase that you are willing and able to work in the public sector.” This can be an advantage for suppliers who are less experienced in public sector work, as the barrier for entry tends to be quite low, particularly to join a Dynamic Purchasing System.

Once a supplier is on a framework, it can be used to their advantage as evidence to draw from when bidding for other contracts, or as a way to build relationships with buyers and/or other suppliers. As Chris described it, frameworks give an opportunity for suppliers “to flex their muscles and show their skills, leading them on to greater things and ultimately winning more work.

 

Where frameworks can fall down

Frameworks have their downsides as well as the benefits – a particular challenge is the limited chance for suppliers to join, as missing the opening period at the beginning can mean losing the opportunity to work with that buyer for typically a four-year period. For suppliers, this means lost work and for buyers it means a more limited selection of available suppliers to suit their needs.

However, this obstacle can be overcome through the use of a Dynamic Purchasing System (DPS), which works the same as a regular framework except that suppliers can join at any time; in Chris’ words, if a framework is like a private members club that only accepts people once a year, a DPS is like a gym that will accept members at any moment in time. This increases the flexibility granted by frameworks; for example, if a buyer wants to work with a particular supplier, they can simply invite them to join their DPS, and then use that to award the work.

Another challenge that comes with frameworks is that they require suppliers to commit to pricing for a term period as part of the application process, which can cause significant issues when the market faces unanticipated changes; in recent years, this has been seen with the impact of high inflation and COVID-19.

In a worst-case scenario, the prices that a company previously set can be no longer commercially viable, leaving the supplier to decide whether to decline a contract or accept it, knowing it will be unprofitable, simply to maintain their relationship with the buyer.

 

How the Procurement Act 2023 affects the future of frameworks

As for the future of frameworks, Chris suggested that “frameworks, particularly DPSs, are only going to get more popular,” noting that the new Procurement Act 2023 will require frameworks to be opened at least twice during their term to help alleviate the current challenge of limited joining opportunities.

This could particularly benefit fast-moving technological markets, as startup businesses that have grown very quickly will be able to work with buyers, even if they were unable to join the framework when it was established.

Chris added that “looking at some of the big framework providers, they’ve all got lots of upcoming frameworks being procured actively now, and also in the next twelve months.” One major area is the creation of electric vehicle charging frameworks, which are being designed to help Councils find a compliant route to market to spend their LEVI funding.

The growing use of frameworks makes understanding how they are being used more important than ever, made more difficult when call off awards sometimes go unpublished. Again, the introduction of the Procurement Act may signal a positive change in this area due to its emphasis on increasing transparency.

 

The Priority Waterfall: Which frameworks, and in what order?

Chris shared that the two most pressing questions a supplier should ask before applying to join a framework are “Can we deliver on this? Are we a good fit for this framework?

When a supplier has found a framework that does fit their business, Chris emphasised that “the more frameworks you’re on, the more shop windows you have.” In this way, being on a framework can be beneficial from a branding and reputational perspective, increasing the number of times and places that a buyer can see a supplier’s name come up.

Another key piece of advice Chris offered is to “cover your bases” through a priority waterfall, working through routes-to-market in order of importance within their market. For example, usually the first port-of-call for a supplier will be to look at where buyers are transacting and seek to join those frameworks first. After that, suppliers should branch out to consider where their competitors have been transacting and finally, they should consider any other routes to market they can trade through to ‘mop up’ any extra work.

 

Providing Frameworks visibility in Oxygen Insights

For those keen to follow Chris’ advice on looking at where others are transacting, the newly released Frameworks add-on within Oxygen Insights provides users a way to keep track of how frameworks are being used, and which ones should be highest on their priority list. The new Frameworks add-on builds upon the extensive frameworks data the Insights team was already collecting, “joining the dots to create buckets of data” that are more beneficial to clients.

The new add-on will give suppliers the ability to see which frameworks their targeted buyers are using and have called off from, as well as the ones their competitors are on. As Chris put it, users will be able to view supplier’s “shop windows,” and help suppliers understand “which frameworks are the active shop windows with work being awarded, and crucially, which are the ones where competitors are just advertising themselves.”

Ultimately, Chris remarked that the upgrade will “rationalise the data so that suppliers and buyers will finally be able to see where people are transacting”, completing a final piece of the puzzle to give the most comprehensive public sector competitive intelligence available; and with frameworks set to become ever more important, this change couldn’t be timelier.

To find out more about Oxygen Insights, including the new Frameworks add-on, book a call with our friendly team.

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