What does framework agreement mean?
A framework agreement is a public procurement tool that lets contracting authorities set the terms for recurring purchases over a specific period in advance. Unlike a classic individual contract, a framework agreement does not call off a specific service right away. Instead, the key contract terms such as prices, quality standards and delivery conditions are agreed, and individual call-offs are made on that basis during the contract term.
Framework agreements can be concluded with a single company or with several companies. For framework agreements with several companies (so-called multi-supplier framework agreements), procurement law does not set a minimum number of contract partners. The individual call-offs can then either be made directly according to set rules or be awarded after a renewed mini-competition among the framework partners.
The term of a framework agreement is generally no more than four years, including all extension options. Longer terms are only allowed in special, justified cases. The estimated total value of all individual contracts planned during the term determines the contract value and therefore whether the EU thresholds are reached.
Relevance for bidders
Framework agreements are especially attractive for bidders, because they offer a longer-term outlook for orders and make planning more reliable. At the same time, keep in mind that a framework agreement does not guarantee any purchases. The contracting authority is generally not obliged to call off a certain volume, unless the agreement provides for a minimum purchase quantity.
When taking part in framework agreements, bidders should assess their capacity realistically, because call-offs must be served over the entire contract term. Overstretching can lead to performance problems and, in the worst case, to termination of the framework agreement. It is also a good idea to base your pricing carefully on the entire term and to factor in possible cost increases.
Legal framework
Above the EU thresholds, framework agreements are governed by Section 21 VgV (Public Procurement Ordinance). EU Procurement Directive 2014/24/EU governs framework agreements in Article 33. In the utilities sector, the provisions of the SektVO (Sector Ordinance) apply. Below the thresholds, the framework agreement is provided for in Section 15 UVgO (Sub-Threshold Procurement Ordinance). In several rulings, the Court of Justice of the European Union (CJEU) has specified the duty to state maximum values in framework agreements, to ensure transparency and to limit the contract volume.