About framework and DPS agreements

On occasion we’re asked for an overview of the routes to market available, and in particular, the difference between a framework and a Dynamic Purchasing System (DPS). This summary highlights the key features and draws out some of the differences.

What is a Dynamic Purchasing System (DPS)?

A DPS is a procurement tool for works, services and goods. It is similar to an electronic framework agreement, however new suppliers can apply to join at any time. DPSs are run as a wholly electronic process. All contracting authorities, including central government purchasing bodies, can set up a DPS.

A DPS is run using a two-stage process. Firstly, during the initial set up stage, all suppliers who meet the set criteria will be admitted to the DPS and there is no limit on how many suppliers may apply to it. The second stage of a DPS is where contracts are awarded. The contracting authority invites all suppliers on the DPS, or within the relevant category within the DPS to bid for the contract.

Using a DPS can help speed up and streamline procurement for suppliers and buyers and the award of tenders can be quicker than some other procurement procedures.

What is a framework?

A procurement framework is a list of pre-qualified suppliers that can bid for tenders around a specific group of goods, services and works. Frameworks have requirements such as particular technical and capability standards. They also come with standardised contract terms. Frameworks are often divided by lot, product, or service type.

Buyers can procure from a framework in various ways, the two most common being direct award or mini-competition. Direct award is possible when goods or services can be easily defined and priced, so an order can be directly placed with the supplier that best meets a buyer’s needs.  Where this is not possible, such as with more complex requirements for solutions or services then a further competition should be run among all the suppliers who can bid for the business. So not all frameworks will have the functionality to direct award.

How is a DPS different to a framework?

Since not all frameworks are the same, it’s difficult to determine clear cut differences between the two procurement routes. However, there are a few elements that seem to be a clear distinction when it comes to most frameworks currently on the market.

Here are just a few of the differences between a DPS and a framework:

• In a more volatile economy, or in emerging markets, some suppliers stop trading and new companies are being launched at record-breaking levels e.g. the software and app sector. This can be a problem with existing frameworks. A DPS, in principle, can reduce this risk by allowing new suppliers to join during its lifetime.
• The DPS option does provide easier entry to SMEs, as the initial assessment stage is not as detailed as under a framework agreement. However, there does need to be a process in place to assure technical and security considerations, subsequently.
• Under a DPS it is not possible to restrict the number of suppliers to each category, subject to the supplier passing technical, financial, quality and suitability assessment stages. With a framework agreement supplier limits can be applied.
• A framework is limited to four years, whilst a DPS has no such limitation and new suppliers can join a DPS at any time during its lifetime. However, this does allow the market to adjust their process for each competition, in contrast to a framework, where supplier rates and pricing can be set within the agreement.
• A DPS does not have the option for a direct award. The only award mechanism available on a DPS is via a mini-competition (also called a further competition)

Summary 

There are pros and cons to using a DPS above a framework, if suppliers can join at any time, it avoids supplier lock out and enables the public sector access to the newest cutting-edge technology.

Ultimately the procurement vehicle should be chosen by weighing up what is being procured, the nature of the particular market and the specific needs of the contracting authority.