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Framework agreements

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Framework agreements are a popular procurement tool in tendering practice. It is often mistakenly assumed, however, that the tendering of a framework agreement would entail less effort from the standpoint of procurement law. With this in mind, the following article seeks to offer a brief overview of the things that need to be considered from the point of view of procurement law.

If several contracting authorities are going to apply a framework agreement, their naming in the announcement is mandatory (cf. § 21 (2) Sentence 2 VgV).
The total volume of the framework agreement must be clearly determined in advance and announced to the bidders as a binding maximum purchase quantity (ECJ, 19 December 2018 – C-216/17). The point of departure for this consists either of the specific needs of the beneficiaries or – if these cannot be specified with finality – past experience.
It is true that this decision was taken based on the old EU directive. Under the wording of the new § 21 (1) Sentence 2 VgV, the envisaged order volume must be determined and announced as precisely as possible but does not need to be conclusively determined. In future, however, in the absence of a robust practice of judicial decision-making to the contrary emerges, in future contracting authorities that put framework agreements out to tender will be well advised to specify a maximum quantity of services callable by primary and secondary contracting authorities.
There is no need to specify a minimum purchase quantity if this is actually not possible.

Framework agreements also require a clear and exhaustive statement of work. The subject matter of the service must be described precisely. Simplifications are valid only in regard to the place and time of individual acceptance.

If technical developments are expected over the life of a framework agreement, a functional statement of work is recommended.
If a framework agreement is concluded with several companies, it must already be clear from the tender documents how the individual award of contract will take place. This means that even the provisions of a subsequent mini-competition must be announced in advance.
By way of exception, individual requisitions can be made by e-mail (cf. § 21 (3) Sentence 2 VgV).

As this brief list alone shows, a considerable amount of coordination is required before a framework agreement can be tendered. However, this effort should not be spared. Where large-volume procurements are involved, the benefits, particularly with regard to the term (an average of 4 years under VgV and 6 years under SektVO) and the simplified individual requisition, are still far greater than the effort involved.

by Prof. Dr. Christian-David Wagner, an attorney specialising in procurement law

Image source: © p365.de - Fotolia

 

Date: Wednesday, April 24 2019

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