Understanding how framework agreements work in public tendering

The long procurement process in the public sector has for years been blamed for the delay in executing key projects, as well as inhibiting service delivery across the country. In the past, procurement process could at times take over six months, a situation that called for an urgent solution to improve implementation of government projects and service delivery. One of the mechanisms adopted to ease this challenge was encouraging public procurement entities to embrace framework contracts. Framework contracting is whereby procuring entities enter into agreements with contractors, indicating terms and conditions for making specific purchases in a given period of time. A framework covers the provision of a generic group of goods, works or services (or a combination). For instance, goods like office furniture, services like design consultancy and works like construction of classrooms. A public entity may normally have one ‘framework’ for each generic group, but it may have a ‘framework agreement’ with more than one supplier under each framework. According to procurement industry experts, framework contracts are increasingly being preferred because they ensure value-for-money in public tendering. They note that framework agreements help public agencies to cut costs. How framework agreements work Public entities advertise for tenders, calling on contractors to bid for supplies and works under framework contracts. Later, the potential bidders are shortlisted and vetted. The successful firms are kept on a waiting list to facilitate frequent buying instead of advertising the jobs anytime need arises. Vedaste Mugirineza, a procurement consultant in Kigali explains that, under the agreements, a few details of the requirements like price, quality of services, and delivery time are given. More details are given to whichever firm is selected to supply goods or provide a service, which may include the scope and length of the work or supplies. “This arrangement works as an ‘umbrella agreement’ that sets out the terms under which individual contracts can be made throughout the period of the agreement,” Mugiraneza explains. Benefits This kind of arrangement is preferred because it saves public contractors a lot of money as they will not go through the whole tendering process with all its associated costs every time they need supplies or services but will rather pick from the potential suppliers and service providers that are in the contractor’s framework agreement. According to Bosco Kayitare, a procurement expert in the Southern Province, this type of arrangement benefits both the contractor and the supplier as it is time-saving. “The process of contracting for supplies and services like cleaning or office supplies and maintenance through public tendering is expensive and time-consuming, especially for big firms that often need supplies. “However, when potential suppliers are earmarked under the framework agreement, picking a potential supplier becomes easy and less costly,” explains Kayitare. Candide Musomandera, the acting director for the monitoring and audit unit at Rwanda Public Procurement Authority (RPPA), argues that this approach ensures value-for-money, which is the ultimate goal for public procurement entities. She says, under the arrangement, the potential service providers in the framework offer competitive prices and provide excellent work “because one supplier cannot assume a monopoly role, and any contracted firm will work hard to maintain the contract. “Performance of framework agreements is relevant with RPPA law that does not allow any government agency to award a tender to the same supplier for more than three times, however good they might be,” Musomandera explains. She adds that the approach seeks to ensure service providers are at their best practice and also give opportunity to other firms that have the potential and technical knowledge to do the same work. She points out that framework contracts make the implementation of this law easier as contractors keep awarding contracts to different potential suppliers under the framework agreements easily. Contractors speak out Talking to Business Times, different contractors expressed concerns about the performance of framework agreements. While they appreciate the fact that being listed under potential contract winners is good for business, most times they are considered in various framework agreements of different public entities but never win any contract yet they invest time and money to get into such agreements. Daniel Kwizera, the director of Electric Plus Engineering, in a recent interview said many potential suppliers and contractors are not aware of the opportunities presented by framework contracts advertised by public entities. “As a result, they miss out on the long-term potential working relationships with these bodies,” he said. Kwizera urged public entities to sensitise the public, especially contractors, about framework contracts so that all procurement sector players understand them and how they work. He argued that this will make framework agreements popular and give small firms an opportunity to apply for deals under framework contracts in different government agencies.

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Understanding how framework agreements work in public tendering