Making Framework Agreements Agreeable to Public Entities
Utilized where the public entity requires goods, works or non-consultancy services but is not able to determine the exact quantities required at the time of entering into the agreement.
Framework Agreements are legally-binding arrangements with suppliers to establish terms governing contracts that may be awarded during the life of the agreement. In other words, it is a general term for agreements that set out terms and conditions for making specific purchases (call-offs).
The Public Procurement and Assets Disposal Act 2015 defines a “framework agreement” as a pact between a procuring entity and a selected supplier (or suppliers) or contractor (or contractors) identified for a definite term to supply goods works or service whose quantities and delivery schedules are not definable or determinable at the beginning.
This procurement method is utilized where the public entity requires goods, works or non-consultancy services but is not able to determine the exact quantities required at the time of entering into the agreement. The term of the agreement is limited to three years and a minimum of seven alternative vendors must be included for each category.
When implementing the framework agreement, the public entity may procure through call-off orders or invite mini-competitions among persons that have entered into the framework agreement in the respective category.
Here’s what the Procurement Laws say about Framework Agreement
The use of Framework Agreement as a procurement method is governed by Section 114 of the Public Procurement and Asset Disposal Act Revised Edition 2016 as outlined below:
For the purposes of sub-regulation (2)(b) above, the appropriate procedure for contracting under a framework agreement is defined within the Regulations is as follows:
The Maximum Level of Expenditure for Framework Agreements
Guided by the Second Schedule of the Public Procurement and Assets Disposal Regulations (2020), where the procurement method is Framework Agreement, the threshold matrix is provided as follows:
|Procurement Method – Framework agreement (Section 114 of the Act)|
|No Maximum expenditure under this method provided the conditions under this section are met.||No Maximum expenditure under this method provided the conditions under this section are met.||No Maximum expenditure under this method provided the conditions under this section are met.|
|No minimum||No minimum||No minimum|
For the goods or services whose prices are volatile, framework agreements shall include an indexing mechanism to adjust prices based on prevailing Central Bank’s monthly rate of inflation or the consumer price index of the Kenya National Bureau of Statistics. Here’s a link to PPAD Regulations 2020 for additional details on how the Framework Agreement gets implemented as a procurement method by the Government of Kenya.
Have you tried applying for a Framework Agreement before? Share your experience and learnings below.
This article is part of the Procurement Methods blog series.