The new Procurement Act 2023 introduces “open frameworks,” revolutionising public sector buying. These flexible agreements, unlike traditional closed frameworks, allow new suppliers to join throughout their up to eight-year lifespan, fostering greater competition, innovation, and value for money
Public sector buyers in the UK are set to benefit from a significant shift in procurement strategy with the introduction of “open frameworks” under the new Procurement Act 2023.
This innovative approach promises to unlock greater value for money, foster increased competition, and provide unparalleled access to a dynamic range of suppliers, including burgeoning small and medium-sized enterprises (SMEs) and voluntary, community, and social enterprises (VCSEs).
Previously, under the Public Contracts Regulations 2015, Crown Commercial Service (CCS) framework agreements operated as ‘closed’ systems. Once established, these frameworks typically prevented new suppliers from joining for their entire duration, often up to four years (or eight for defence and utilities). This rigid structure meant that public sector buyers could miss out on emerging innovations and competitive pricing from new market entrants.
What defines an Open Framework?
At its core, an open framework is a more flexible, multi-stage commercial agreement designed to run for up to eight years. Unlike its closed counterpart, an open framework is mandated to re-open at least twice during its lifespan. These critical opening points offer a wealth of opportunities:
- Expanded supplier pool:
- New suppliers, or those unsuccessful in initial bids, gain the chance to compete for inclusion.
- Supplier adaptability:
- Existing suppliers can be readmitted based on their initial bids, and crucially, they can expand or alter their service offerings and pricing in response to market developments.
- Dynamic market response:
- Suppliers also have the flexibility to leave a framework and re-compete at subsequent opening points, fostering a more agile and responsive marketplace.
While both open and closed frameworks allow suppliers to bid for inclusion at launch, the key differentiator lies in the ongoing opportunity for market entry and adaptation that open frameworks provide.
Maximising value for public sector buyers
The introduction of open frameworks is a game-changer for public sector buyers, promising a multitude of benefits:
Increased competition and innovation
The ability to integrate new suppliers at various stages of the agreement significantly broadens the pool of potential providers. This increased competition is expected to drive down costs and encourage innovation, ultimately delivering better value for taxpayers’ money. Furthermore, the inclusion of SMEs and VCSEs, who may have previously found it difficult to access closed frameworks, is a key objective, promoting a more diverse and resilient supply chain.
Access to emerging technologies and services
In rapidly evolving markets, such as Artificial Intelligence (AI), the static nature of closed frameworks often meant buyers had to wait for an entire agreement to expire before accessing the latest innovations.
Open frameworks address this by allowing awarded suppliers to continually update their product and service offerings. This ensures public sector buyers can leverage new and emerging technologies as they are developed, procuring the most up-to-date and effective solutions.
Enhanced value through competitive pricing
The periodic re-opening of frameworks allows both new and existing suppliers to adjust their pricing in line with market dynamics. This continuous competitive pressure empowers public sector buyers to secure more favourable terms throughout the lifespan of the agreement, leading to greater financial efficiencies.
Consistent and compliant procurement
Despite the inherent flexibility, each stage of an open framework will operate under substantially the same terms and conditions. This ensures a consistent and compliant buying process for public sector organisations, minimising administrative burdens and providing clarity for buyers.
The future of public sector procurement
While open frameworks represent a significant step forward, closed frameworks will still play a role in CCS’s commercial agreements. Experienced commercial experts will determine the most beneficial type of framework during the planning stages, often incorporating insights from preliminary market engagement with buyers.
An open framework may not always be the optimal choice. For instance, in markets with limited suppliers or low diversification, a shorter, four-year closed framework might be more appropriate, as significant changes in the supplier landscape are unlikely. Similarly, in exceptionally fast-changing markets, the consistent terms of an open framework could become restrictive, making a shorter, adaptable closed agreement more suitable.
However, where open frameworks can deliver maximum value, such as through cost savings or facilitating more ambitious procurements, they will be prioritised. The new Procurement Act 2023, with its emphasis on open frameworks, signals a clear commitment to developing agile and responsive routes to market, ensuring public sector buyers can consistently acquire the goods, services, and works they need, efficiently and effectively.
