Using procurement frameworks and PSLs successfully

So, we’ve published a couple of pieces on frameworks (here and here), featuring the new ESPO catering services agreement and the platform provided by Intenda to help users run mini-competitions.  In the last one, we highlighted some of the issues around frameworks or preferred supplier lists (PSLs); while they can be very useful in terms of convenience, risk and value management, those benefits will only be realised if they are used appropriately.

Balancing the pros and cons of frameworks, we can see that there are significant advantages, particularly in terms of convenience, which means that it is unlikely they will disappear from the public (or private) sector procurement tool-set. But there are things that procurement functions can do to maximise the chance of frameworks actually delivering value for money.

Here's our list - more detail in the White Paper (see below).

1.  Frameworks must deliver good value pricing. That sounds obvious but many simply do not. In most markets and occasions, best pricing is obtained in return for committing spend and volume.

2.  So in many cases, it is wise to avoid getting locked into pricing at the initial framework formation stage unless you are guaranteeing a significant level of business.  By all means, agree standard terms and conditions through a framework or PSL; but don’t expect the best pricing can be obtained without committing to or guaranteeing business levels.

3.  That suggests that it is important to make robust and structured use of further competition – between firms on the frameworks, or even, where it can be done legally, involving “outsiders”.  This competition at the point where real volume is being committed is key to extracting the best possible value from the framework and the suppliers on it. (Which brings us back to the ESPO framework and the Intenda tool of course)...

4. Segment the framework to an appropriate level.  That will depend on both the range of services required, the level of spend, and the confidence in the users of those services will actually use the framework.

5.  Ensure some flexibility is retained to remove or add suppliers reasonably regularly and promptly.  A list should not be cast in concrete for 3 or 5 years.  Markets change and interesting new providers emerge and develop.  This is harder to achieve in the public sector but is still important to address –perhaps through letting a set of frameworks with overlapping content and staggered termination dates?

So, if you are at all interested in the topic, please do download our free White Paper here; registration takes less than 2 minutes and will then enable you to also download all of the amazing Spend Matters US material.  I know we're biased, but we think it is important reading for everyone involved in setting up, managing or considering using framework type arrangements.

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