Blog: Friday 6th March - Capsticks: Are open frameworks an effective procurement tool for light touch services?

Are open frameworks an effective procurement tool for light touch services?

Having just celebrated the first anniversary of the coming into force of the Procurement Act 2023, it now feels like the right time to reflect on the changes implemented, and whether these have had the desired effect in making procurement simpler, more flexible and transparent.

One of the more controversial changes has been abolition of the dynamic purchasing system (DPS) and the introduction of its replacements - open frameworks and dynamic markets. Yet for all the claims of making procurement simpler, the rules surrounding open frameworks and dynamic markets are by no means straightforward, and this is having a particular impact in the context of procuring light touch services.

The Pseudo DPS

Under the Public Contracts Regulations 2015 (PCR), a DPS is an electronic tool which allows suppliers to be admitted throughout its term, and contracts to be awarded to the pool of suppliers on the DPS. Under the PCR, the use of a DPS is limited to the procurement of commodities. However, historically, local authorities have adopted pseudo DPS structures for the procurement of light touch services. These are services which are subject to less regulation, and which you will now find listed in Schedule 1 of the Procurement Regulations 2024. They include health and social care services, educational services, cultural services, catering services, legal services, community services and prison and security services. There is no one way of structuring a pseudo DPS, but the purpose is always to provide flexibility.

Now, in the absence of the DPS, local authorities are turning to open frameworks as an alternative mechanism for awarding light touch contracts. However, open frameworks have their limitations – so are they an effective alternative to the pseudo DPS for light touch services?

What is an open framework?

An open framework is a scheme of frameworks that provides for the award of successive frameworks on substantially the same terms (section 49(1) Procurement Act 2023).

This means that you have a series of frameworks being awarded one after the other. When the current framework is reaching expiry, you reopen competition for the next framework in the scheme, and on expiry of the current framework, enter into the next one and so on, provided that:

• you award a new framework at least once in the first three years; and
• you award another framework at least once during each five-year period thereafter; and
• the maximum term of the framework does not exceed 8 years.

This means you have to open the framework at least twice during its maximum 8-year term (note that where the open framework is awarded to a sole supplier, the maximum term is reduced to 4 years).

An example of how this could look is as follows:

You are able to open the framework more often if you wish, but there is an administrative burden of doing so. Opening up the framework will involve:

• carrying out a procurement process – including publishing a tender notice, issuing tender documents and evaluating tenders; and
• executing new framework agreements with all suppliers appointed to the next successive framework (including existing suppliers who have been reappointed).

Can you use an open framework more flexibly for light touch services?

Under the Act, open frameworks work differently than a DPS because they only allow the admission of suppliers at defined intervals (i.e. the expiry of the previous framework) and following a new procurement exercise which is open to all.

We are aware that local authorities have been seeking clarification on whether an open framework can be designed more flexibility for light touch services. Effectively this would mean creating pseudo open frameworks – just like a pseudo DPS, and many contracting authorities appear to be adopting this approach already. Such structures could include introducing the ability to open the framework at will or structuring the open framework more akin to an approved provider list so that there is no need to keep entering into new frameworks with existing suppliers. The risk is, however, that in the legislation, along with the published Government guidance, the ability to design and implement a pseudo open framework is not expressly available – although neither is it expressly prohibited.

Adopting a strict open framework structure has the potential to create a barrier for flexibility, which is a problem, because the market for many light touch services is fluid, and the demand fluctuating. Being able to admit suppliers to a framework more readily and easily when demand is high is critically important so that local authorities can meet their statutory duties and obligations.

What about dynamic markets?

The Government originally proposed in its Green Paper, the creation of the DPS+ which later evolved into the dynamic market. However, a contracting authority can only award public contracts (i.e. above threshold contracts) under a dynamic market and following an open competitive tendering procedure, somewhat defeating the object of setting up the market in the first instance. With only 16 dynamic market intention notices having been published since the Act came into force, it is clear that the dynamic market does not offer local authorities the solutions they require for the procurement of light touch services.

So, what’s next?

Since open frameworks and dynamic markets do not appear to offer the flexibility often sought in the procurement of light touch services, and the lawfulness of the pseudo open framework is unclear, an argument arises on whether the law needs to change. We have been working with several of our local authority clients to look at how we can come together to help effect change, if this is something that interests you, please contact Ruth Yates on ruth.yates@capsticks.com.

Written by Ruth Yates at Capsticks.