FRAMEWORK AGREEMENTS
Prepared by: The Office of Procurement Regulation
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Developed in accordance with the Trinidad and Tobago Public Procurement and Disposal of Public Property
Act Number 1 of 2015 (as amended) and the attendant Public Procurement and Disposal of Public Property
Regulations 2021
General Guidelines – Framework Agreements
TABLE OF CONTENTS
1. PREAMBLE .......................................................................................................................... 1
1.1 Purpose of these Guidelines and Template ......................................................................... 1
1.2 Who Should use these Guidelines? ..................................................................................... 1
1.3 How Should these Guidelines be Used? .............................................................................. 1
1.4 Compliance with these General Guidelines........................................................................... 1
1.5 Exemptions or Amendments to these General Guidelines.................................................... 1
2. INTRODUCTION ................................................................................................................... 3
2.1 What are Framework Agreements? ...................................................................................... 3
2.2 Advantages of Framework Agreements ................................................................................ 3
2.3 Potential Challenges of Framework Agreements .................................................................. 4
2.4 When to use Framework Agreements................................................................................... 5
3. TYPES OF FRAMEWORK AGREEMENTS ................................................................................. 7
3.1 Background ........................................................................................................................... 7
3.2 Models of Framework Agreements ..................................................................................... 10
3.2.1 Model 1 – Closed Framework Agreements, with One or More Suppliers, without Second-
Stage Competition ..................................................................................................................... 10
3.2.2 Model 2 – Closed Framework Agreement, with Multiple Suppliers and Second-Stage
Competition ............................................................................................................................... 14
3.2.3 Model 3 – Open Framework Agreement, with Multiple Suppliers and Second-Stage
Competition ............................................................................................................................... 17
3.3 Changes During the Operation of a Framework Agreement ............................................... 20
4.0 COMMON APPROACHES FOR SECOND STAGE COMPETITION ............................................ 23
5.0 DETERMINING THE MOST APPROPRIATE TYPE OF FRAMEWORK AGREEMENT ................... 26
5.1 Key Considerations in Developing Framework Agreements ................................................ 27
6.0 USING FRAMEWORK AGREEMENTS FOR EMERGENCY SITUATIONS.................................... 29
6.1 Conditions for Use: .............................................................................................................. 29
6.2 Procedures for Establishing Framework Agreements Under Emergency Situations: .......... 29
6.3 Key Considerations .............................................................................................................. 31
REFERENCES ........................................................................................................................... 32
GLOSSARY OF TERMS.............................................................................................................. 33
LIST OF ACRONYMS ................................................................................................................ 33
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Section 1
Context and Background
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1. PREAMBLE
1.1 Purpose of these Guidelines and Template
The purpose of these general guidelines is to provide procuring entities engaged in the
expenditure of public funds with a sound understanding of the different types of framework
agreements that may be used in the procurement of the goods, works or services they require
to fulfil their mandates and objectives. A step-by-step process for setting up the various types
of framework agreements and the conditions of use are also provided.
Section 5(1) The objects of this Act are to promote—
a) the principles of accountability, integrity, transparency and value for money;
b) efficiency, fairness, equity and public confidence; and
c) local industry development, sustainable procurement and sustainable
development, in public procurement and the disposal of public property.
1.2 Who Should use these Guidelines?
These general guidelines and template should be used by Procurement Officers and other
decision makers within the organisation involved in the procurement of goods, works or
services. These guidelines can also be utilised by suppliers or contractors interested in gaining
an understanding of how the system of frameworks agreements operate under the new public
procurement regime.
1.3 How Should these Guidelines be Used?
These guidelines should be read in conjunction with the Public Procurement and Disposal of
Public Property Act, 2015, as amended, (“the Act”), the Public Procurement and Disposal of
Public Property (Procurement Methods and Procedures) Regulations, 2021 and the Public
Procurement and Disposal of Public Property Regulations (Pre-qualification and Pre-selection)
Regulations, 2021.
1.4 Compliance with these General Guidelines
In accordance with Sections 30(1)(a) and 54(1)(a) of the Act, public bodies ‘shall comply with’
these general guidelines issued by the Office of Procurement Regulation (“the OPR”).
1.5 Exemptions or Amendments to these General Guidelines
As may be applicable, pursuant to Sections 13(1)(c), 30(1)(b) and (c), 30(2), 30(3), 54(1)(b) and
(c), 54(2) and 54(3) of the Act, public bodies shall prepare handbooks and special guidelines
highlighting exemptions or amendments to these general guidelines, in the format specified
by the OPR, for its approval.
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Section 2
Introduction
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2. INTRODUCTION
2.1 What are Framework Agreements?
Section 4 of the Public Procurement and Disposal of Public Property Act, 2015, as amended,
(“the Act”), defines a “framework agreement” as “an agreement or other arrangement
between one or more procuring entities and one or more contractors or suppliers which
establishes the terms, in particular the terms as to price and, where appropriate, quantity,
under which the contractor or supplier will enter into one or more contracts with the procuring
entity during the period in which the framework agreement or arrangement applies.”
Accordingly, a framework agreement shall contain the following :
1. All information which is required to allow effective operation of a framework
agreement including the agreed terms and conditions and pricing;
2. Information on how the framework agreement can be accessed;
3. Information on how publication of any forthcoming procurement contract under the
framework agreement can be accessed.
(Regulation 18(2) of Public Procurement and Disposal of Public Property (Procurement Methods
and Procedures) Regulations, 2021)
It should be noted that a framework agreement does not establish a legally binding contract
between parties. Instead, it is an arrangement that describes the terms and conditions that
will apply if a procuring entity wishes to procure goods, works or services from a
supplier/contractor that is party to the agreement.
2.2 Advantages of Framework Agreements
The main advantages in establishing a framework agreement include:
1. Administrative efficiency: This is where the procedure used by the procuring entity for
repeat procurements, can be administratively efficient, because of the effective
aggregation of a series of procurement proceedings.
Therefore, many steps that would otherwise be taken for a series of procurements can
be undertaken only once, for example, drafting of terms and conditions, advertising
and assessing suppliers’ or contractors’ qualifications. As a result, purchases can be
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made with lower transaction costs and shorter delivery times than if each purchase
was procured separately.
2. Reducing the need for urgent procedures: As a result of the administrative efficiency
mentioned in item #1 above, public bodies can benefit from shorter timeframes for
completing procurement procedures and therefore reduce the need for “urgent
procedures” (See Section 6 of General Guidelines – Framework Agreements).
3. Better outcomes for smaller procurements: Smaller procurements are often
considered at risk of abuse or failure to achieve value for money, because they are
often conducted in procedures lacking transparency and competition.
4. Ensuring security of supply through binding a supplier or contractor to supply future
purchases.
5. Aggregating demand across a single entity, or multiple entities encourages suppliers to
offer competitive pricing, where they have the possibility of bulk sales.
6. Process efficiencies: By engaging in centralised purchasing, public bodies can also
promote better quality tender documentation, higher uniformity and standardisation,
as well as better supplier or contractor understanding of the procuring entities’ needs,
each of which can result in improved quality of submissions.
2.3 Potential Challenges of Framework Agreements
Some of the potential challenges in establishing a framework agreement include:
1. It may not be a suitable method for all types of procurement e.g. If the requirements
of the procurement are complex or unusual, the purchase cannot be standardised to a
reasonable degree.
2. It may be unresponsive to change, if new suppliers or solutions evolve quickly with the
market during the term of the framework agreement e.g. Computer-based technology
operates in a competitive market that is constantly evolving.
3. Advanced planning will be required to renew the framework agreement as a further
open competitive procurement process is required to establish a new framework. This
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may be required to be planned at least six (6) months in advance of the expiry date of
the existing framework, if continuity of supply is to be ensured.
2.4 When to use Framework Agreements
Deciding whether to use framework agreements requires careful analysis of the procuring
entity’s needs and markets, and of the applicable procurement procedures and policy
objectives. Analysis and justification for this approach will be captured in the Market Research
Report and the Procurement Strategy Development Form1.
A procuring entity may establish a framework agreement if it is of the opinion that:
1. The need for the goods, works or services, is expected to arise on a repetitive basis
during a given period of time. Where the goods or services are being repeatedly
procured and cumulative volume and value of such goods or services purchased is
significant, the additional costs and complexities of the framework agreement
procedure are more likely to be outweighed by its administrative and value-for-money
benefits.
2. The need for goods, works or services, due to their nature, may arise on an urgent basis
during a given period of time. Framework agreements may be useful to establish
security of supply and to shorten lead times in advance of an emergency and where
there are capacity constraints and/or fragility.
(Regulation 17(1) of Public Procurement and Disposal of Public Property (Procurement Methods
and Procedures) Regulations, 2021)
1 [Link]
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Section 3
Types of Framework Agreements
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3. TYPES OF FRAMEWORK AGREEMENTS
3.1 Background
Framework agreement procedures can be described as a two-stage procurement technique,
undertaken over a period of time, during the lifespan of the agreement.
Regulations 18(1) of the Public Procurement and Disposal of Public Property (Procurement
Methods and Procedures) Regulations, 2021 states that, where a procuring entity decides to
establish a framework agreement it shall be conducted in the following two (2) stages:
1. the invitation of a supplier or contractor to be a party to the framework agreement,
utilising the open bidding method or limited bidding method; and
2. the award of a procurement contract under the terms of the framework agreement to
a supplier or contractor, as and when required.
In understanding the above two stages it is important to distinguish between a framework
agreement and a procurement contract. A framework agreement is not a binding contract but
resembles a Memorandum of Understanding where a public body(ies) that is/are party to the
agreement can subsequently award a contract and issue a Purchase Order to a
supplier(s)/contractor(s) for the provision of goods, works or services in accordance with the
terms and conditions contained in the framework agreement.
A “procurement contract” on the other hand, is a contract concluded between the procuring
entity and a supplier(s) or a contractor(s) at the end of the tendering stage.
Before examining the models of framework agreements in detail, it is important for a procuring
entity to understand the difference between ‘closed’ framework agreements and ‘open’
framework agreements (see the Diagram 1 below).
1. Closed framework agreements are concluded with a fixed number of suppliers or
contractors at the first stage. No additional supplier(s) or contractor(s) are allowed to
join the agreement during its stipulated lifespan.
Closed framework agreements can result in a single supplier or contractor, or multiple
suppliers or contractors being a party to the agreement. It allows the volume and
timing of orders (and delivery locations where necessary) to be left open at the first
stage but are set when the orders are placed during the second stage.
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The terms and conditions for the procurement and the suppliers’ or contractors’ offers
are also fixed, so for example, unit prices are set when the framework agreement is
concluded.
2. Open framework agreements are ones in which new suppliers or contractors can be
allowed to join the agreement throughout its duration. Open framework agreements
are concluded with multiple suppliers or contractors being party to the agreement.
Diagram 1 – Closed vs Open Framework Agreements
(Modified from 2021, Guidebook for Setting-up and Operating Framework Agreements. World Bank Group.)
As noted in Section 3.1 above, in establishing a framework agreement the second stage of this
process involves the award of a procurement contract to a supplier(s) or contractor(s) under
the terms of the agreement. The award of the procurement contract can therefore be
concluded utilising the following procedures (also see the Diagram 2 below):
1. Framework agreement procedure with second-stage competition – this procedure is
undertaken when certain terms and conditions of the procurement cannot be
established with sufficient precision when the framework agreement is concluded, and
it is therefore established or refined through a second stage competition (see Section
4.0 below). Both open or closed framework agreements can be used resulting in more
than one supplier or contractor being awarded supply contracts.
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2. Framework agreement procedure without second-stage competition – this procedure
operates under a closed framework agreement and is undertaken when all terms and
conditions of the procurement are established when the framework agreement is
concluded.
NOTE! The first stage in a framework agreement is to select a supplier (or
suppliers) or a contractor (or contractors) to be a party (or parties) to a framework
agreement with a procuring entity. The second stage is to award a procurement contract
under the framework agreement to a supplier(s) or contractor(s) that is/are party to
the framework agreement.
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3.2 Models of Framework Agreements
This Section of these general guidelines addresses the three (3) main models of framework
agreements.
3.2.1 Model 1 – Closed Framework Agreements, with One or More Suppliers, without
Second-Stage Competition
Model 1 depicts a “closed” framework agreement without second-stage competition. This
agreement can be concluded with one or more suppliers or contractors, and the terms and
conditions of the procurement are set out therein (see Diagram 2 below).
Diagram 2 – Components for Model 1 Framework Agreements
Some distinguishing features in a Model 1 type framework agreement include:
• The intention to establish a framework agreement procedure, leading to a closed
framework agreement.
• Whether the framework agreement is to be concluded with one or more than one
supplier or contractor.
• The number of suppliers or contractors it intends to include as a party to the
agreement.
• The description of the goods, works or services and all other terms and conditions of
the framework.
• An appropriate length of time, (based on among other things, the volatility of the
market), for the duration of the framework agreement.
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• An estimate of certain terms and conditions of the procurement that cannot be
established with sufficient precision when the framework agreement is concluded,
such as, volume and timing of orders.
• Whether the award will be to the lowest-priced or to the most advantageous
submission.
This type of framework agreement is suitable for purchases for which the procuring entity can
set most terms in advance, and requires flexibility only as regards to quantities and delivery
terms. Take for example a common pharmaceutical item. Under the Model 1 framework
agreement, the procuring entity will order from the best supplier for the relevant item, and
the supplier will have set its price based on estimated overall volume and frequency of
demand.
Other examples of procurement for which this type of framework agreement have worked
successfully are, Office supplies (e.g. paper) and Cleaning and unit-priced services (e.g. regular
maintenance, pavement repair).
NOTE! It is recommended that framework agreements be established for an
initial term not exceeding three (3) years. Consideration can be given to extending the
agreement by up to a further two (2) years, under the same terms and conditions, but
only if the initial engagement has been satisfactory.
Procedure for establishing Model 1 – Closed Framework Agreements, with One or More
Suppliers, without Second-Stage Competition
Where a closed framework agreement is concluded with more than one supplier, without
second-stage competition the following procedure applies:
Step 1
The procuring entity issues an invitation to suppliers or contractors to be a party to the
framework agreement, utilising the open bidding method or limited bidding method
(Regulation 18(1)(a) of the Public Procurement and Disposal of Public Property (Procurement
Methods & Procedures) Regulations, 2021).
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A procuring entity shall only invite suppliers or contractors who are pre-qualified in the
Procurement Depository to participate in procurement proceedings.
(Regulation 8 of the Public Procurement and Disposal of Public Property (Pre-Qualification and
Pre-Selection) Regulations, 2021)
Step 2
Suppliers or contractors offering the lowest price(s) or most advantageous offer(s) at this stage
are selected and are admitted to the framework agreement as parties (There is considerable
flexibility in selecting the number of suppliers to be admitted).
(Where Applicable)
Prior to admitting parties to the framework agreement, the procuring entity shall inform all
suppliers/contractors (both successful and unsuccessful) in writing of its decision to enter into
a framework agreement with the successful supplier(s)/contractor(s) by issuing a Notice of
Intention to Conclude a Framework Agreement. This step initiates the beginning of the
standstill period (see General Guidelines: Standstill Period).
The “standstill period” is the period from the dispatch of a Notice of Decision to Award a
Contract or Notice of Intention to Conclude a Framework Agreement as required by
Section 35(2) of the Act, during which time a procuring entity cannot accept the successful
submission, and suppliers or contractors can challenge the decision.
Step 3
The procuring entity places the order with the supplier or contractor generated in step 2 above
with the “best” offer for the goods or services required as per the terms of the framework
agreement.
Step 4
The procuring entity issues a purchase order to the supplier or contractor for the goods or
services under the terms of the framework agreement as and when required.
Where a procuring entity places orders under the framework agreement, normally via a
purchase order, this procedure is sometimes referred to as a “call-off”.
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Diagram 3 - Procedure for Establishing Model 1 – Closed Framework Agreements, with More than One
Supplier, without Second-Stage Competition
(Modified from Framework Agreements – An overview of how to design, establish and operate a Framework Agreement in
Investment Project Financing – The World Bank)
NOTE! Only Suppliers or Contractors admitted as parties to the closed
framework agreement, can be selected for the award of the procurement contract.
A multi-supplier framework agreement allows for security of supply if, for example, the
supplier with the “best” offer is unable to fulfil an order (in which case orders can be placed
with the supplier with next “best” offer). This procedure is flexible in that, where the
framework agreement covers a broad delivery area and suppliers are in different parts of that
area, the procuring entity can place an order with the supplier whose delivery costs are lowest
or delivery timeframe are shortest, for the relevant delivery location. Other examples of the
multi-supplier framework agreement are a) placing purchase orders on rotational basis or b)
equal split of demand among suppliers.
A closed framework agreement with more than one supplier or contractor shall be concluded
as one agreement between all parties unless:
1. The procuring entity determines that it is in the interests of a party to the framework
agreement that a separate agreement with any supplier or contractor party be
concluded;
2. The procuring entity includes in the record of procurement proceedings a statement
of the reasons and circumstances on which it relied to justify the conclusion of separate
agreements.
Any variation in the terms and conditions of the separate agreements for a given procurement
is minor and concerns only those provisions that justify the conclusion of separate agreements.
An example may be the need to execute separate agreements to protect intangible or
intellectual property rights.
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3.2.2 Model 2 – Closed Framework Agreement, with Multiple Suppliers and Second-
Stage Competition
A closed framework agreement with multiple suppliers and second-stage competition is one
in which all terms and prices for the final procurement cannot be set by the procuring entity
at the first stage. This type of agreement is concluded with a fixed number of suppliers or
contractors at the first stage where no additional supplier(s) or contractor(s) can join during
the lifespan of the agreement. (see Diagram 4 below).
Diagram 4 – Components for Model 2 Framework Agreements
In addition to the distinguishing features included in a Model 1 type of framework agreement,
a Model 2 framework agreement should include the following:
• A statement of the terms and conditions of the procurement that are to be established
or refined through second-stage competition; and
• The procedures and criteria to be applied during the second-stage competition.
Model 2 type of framework agreement therefore has similar characteristics and features as
Model 1. The difference, however, lies mainly in the second round of competition which allows
the “best” offer to be identified when the procuring entity seeks delivery of the goods or
services it requires. Therefore, under a Model 2 agreement, the second-stage competition
allows the suppliers or contractors to reduce their prices or otherwise improve their stage one
offers now that the precise terms of delivery are set.
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The second-stage competition is often called a “mini-competition” or a “mini-tender phase”,
reflecting that this competition is a refinement of first stage offers.
Examples of types of procurement for which Model 2 framework agreements have worked
successfully are: Standard IT equipment, Standard medical equipment (e.g., x-ray and
ultrasound machines), Essential products/services/construction for emergency situations (e.g.
food, water, medical supplies, shelter kits) and Small works.
Procedure for establishing Model 2 – Closed Framework Agreements, with Multiple
Suppliers, with Second-Stage Competition.
Where a closed framework agreement is concluded with multiple suppliers, with second-stage
competition, the following procedure applies:
Step 1
The procuring entity issues an invitation to suppliers or contractors to be a party to the
framework agreement, utilising the open bidding method or limited bidding method
(Regulation 18(1)(a) of the Public Procurement and Disposal of Public Property (Procurement
Methods & Procedures) Regulations, 2021).
A procuring entity shall only invite suppliers or contractors who are pre-qualified in the
Procurement Depository to participate in procurement proceedings.
(Regulation 8 of the Public Procurement and Disposal of Public Property (Pre-Qualification and
Pre-Selection) Regulations, 2021)
Step 2
Procuring entity assesses the initial offers submitted by suppliers or contractors, to select a
defined number of the “best” suppliers or contractors to be admitted to the framework
agreement.
(Where Applicable)
Prior to admitting parties to the framework agreement, the procuring entity shall inform all
suppliers/contractors (both successful and unsuccessful) in writing of its decision to enter into
a framework agreement with the successful supplier(s)/contractor(s) by issuing a Notice of
Intention to Conclude a Framework Agreement. This step initiates the beginning of the
standstill period (see General Guidelines: Standstill Period).
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Step 3
This step is the “mini-competition” or “mini-tender” (see Section 4.0) phase, where the parties
to the framework agreement generated in step 2 above, are given the opportunity by the
procuring entity to refine their initial offers. This allows the “best” offer to be identified when
the procuring entity seeks delivery of the goods or services it requires.
A mini competition is the process required to carry out a call-off contract under a
framework agreement. It allows for the refinement of basic terms of the framework
agreement prior to making a call-off such as:
• Delivery timescales;
• Invoicing/payment arrangements
• Associated services, such as installation, maintenance and training
Step 4
The procuring entity issues the purchase order to the supplier or contractor with the ‘best’
offer based on the results of the process identified in step 4 (i.e. “mini-competition” or “mini-
tender phase”) for the goods or services under the terms of the framework agreement as and
when required.
Diagram 5 - Procedure for Establishing Model 2 – Closed Framework Agreements, with Multiple
Suppliers, with Second-Stage Competition
(Modified from Framework Agreements – An overview of how to design, establish and operate a Framework Agreement in
Investment Project Financing – The World Bank)
Under the Model 2 type framework agreement, procuring entities can bundle different items
or allow competition on quality aspects (such as faster delivery time, quality of item) in the
second-stage competition, so that the supplier or contractor with the best combined offer for
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the bundle/quality requirement is selected, even though that supplier’s price for some items
may not be the lowest.
Generally, the second stage offers must be better than first stage offers, which provides a
safeguard and can be useful in certain sectors, such as the IT sector, where prices generally
tend to reduce, and quality improve, over time.
3.2.3 Model 3 – Open Framework Agreement, with Multiple Suppliers and Second-
Stage Competition
An open framework agreement, with multiple suppliers and second-stage competition, means
new suppliers or contractors are allowed to join the agreement during its lifetime. This Model
also has the main features of a Model 2 type framework agreement where, there are two
rounds of the procedure, and the terms of the eventual purchase order, including price, are
set through competition at the second stage (see Diagram 6 below).
Diagram 6 – Components for Model 3 Framework Agreements
Model 3 type of framework agreement is therefore designed to address the main concern in
Model 2 agreements, which is, the restriction of competition to a limited number of suppliers
or contractors during the duration of the framework agreement. Therefore, under Model 3
type agreements new suppliers can be allowed to join at any time and the market is
consequently always “refreshed”.
This type of framework agreement is suitable under the following conditions:
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• Dynamic and competitive markets, such as IT supplies;
• Where there is a ready market, so that suppliers or contractors offer broadly the same
quality and technical characteristics;
• Where there are regular new entrants to the markets;
• Where prices may fall; and
• Where the characteristics of the goods, or services are continually evolving.
Examples of types of procurement where this type of framework agreements would be
appropriate include Specialized IT equipment, Medical equipment, Construction services.
Procedure for establishing Model 3 – Open Framework Agreement, with Multiple
Suppliers and Second-Stage Competition
Model 3 type framework agreements are similar to Model 2 agreements, in that, there are two
rounds in the process, however, the procedure to award a Model 3 framework agreement has
some significant differences in practice.
Where an open framework agreement is concluded with multiple suppliers, with second-stage
competition the following procedure applies:
Step 1
The procuring entity issues an invitation to suppliers or contractors to be a party to the
framework agreement, utilising the open bidding method or limited bidding method
(Regulation 18(1)(a) of the Public Procurement and Disposal of Public Property (Procurement
Methods & Procedures) Regulations, 2021).
A procuring entity shall only invite suppliers or contractors who are pre-qualified in the
Procurement Depository to participate in procurement proceedings.
(Regulation 8 of the Public Procurement and Disposal of Public Property (Pre-Qualification and
Pre-Selection) Regulations, 2021)
Step 2
Procuring entity assesses suppliers’ or contractors’ qualifications and the responsiveness of
their offers, but (absent rare exceptions) does not involve a competitive comparison or
evaluation of offers. Suppliers or contractors may include indicative prices, but not binding
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prices. As a result, all qualified suppliers or contractors with responsive offers must be
admitted to a Model 3 framework agreement.
(Where Applicable)
Prior to admitting parties to the framework agreement, the procuring entity shall inform all
suppliers/contractors (both successful and unsuccessful) in writing of its decision to enter into
a framework agreement with the successful supplier(s)/contractor(s) by issuing a Notice of
Intention to Conclude a Framework Agreement. This step initiates the beginning of the
standstill period (see General Guidelines: Standstill Period).
Step 3
Suppliers or contractors that are parties to the framework agreement are invited to present a
final submission; the procuring entity selects the successful submission identified at that point
through second stage competition, (all competition among suppliers or contractors, in the
sense of determining the “best” offer, therefore takes place at this step).
Step 4
The procuring entity issues the purchase order to the supplier or contractor with the ‘best’
offer based on the results of the process identified in step 3 for the goods or services required
as per the terms of the framework agreement.
Diagram 7 – Procedure for Establishing Model 3 – Open Framework Agreements, with Multiple
Suppliers, with Second-Stage Competition
(Modified from Framework Agreements – An overview of how to design, establish and operate a Framework Agreement in
Investment Project Financing – The World Bank)
The logistical challenges that large numbers of participating suppliers can raise are among the
reasons for requiring a Model 3 framework agreement to be operated online. In addition,
designing an appropriate and related bundle of goods and services for the framework
agreement, and setting sufficiently rigorous minimum qualification/technical requirements
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can identify realistic suppliers and effectively exclude marginal suppliers that would be highly
unlikely ever to win a contract.
A key question at step 3 above, from the efficiency perspective, will be whether all suppliers
or contractors to the framework agreement are invited to participate in the second stage
competition, or only some suppliers or contractors are invited. The more complex the
competition will be, and the more suppliers take part, the longer and more time-consuming
the evaluation process will be. Limiting the use of complex and non-quantifiable quality
requirements, so that the second-stage competition focuses on price and very simple
quantifiable quality criteria (such as delivery times or warranty periods), can help reduce the
administrative burden even if there are many participants.
Ultimately, Model 3 framework agreements are recommended for goods and services in
competitive, dynamic markets, where the best supplier can be determined by competition
focusing on price when the procuring entity’s need arises, including, but not limited to
emergency procurements.
Table 1 – Summary of the Three (3) Models of Framework Agreements
Model Openness Number of Second Stage Award of
Suppliers Procurement
Contract
Model 1 Closed One or More Without Second- Award to “best” offer
Framework Suppliers Stage Competition for the goods or
Agreements services
Model 2 Closed Multiple Second-Stage Award to ‘best’ offer
Framework Suppliers Competition based on results of
Agreements second stage
competition
Model 3 Open Multiple Second-Stage Award to ‘best’ offer
Framework Suppliers Competition based on results of
Agreements second stage
competition
(Modified from 2021, Guidebook for Setting-up and Operating Framework Agreements. World Bank Group.)
3.3 Changes During the Operation of a Framework Agreement
There can be no change in the description of the subject-matter of the procurement, since
allowing such a change would mean that the original solicitation would no longer be accurate
(and so requiring a new procurement procedure). Framework agreements must have the
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flexibility to allow refinements of terms and conditions and evaluation criteria during second-
stage competition, and such refinements are permitted to the extent that the framework itself
allows the changes, thereby promoting transparency in the process. This flexibility is available,
subject to the overriding rule that the refinements do not change the description of the
subject-matter of the procurement.
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Section 4
Common Approaches for Second Stage
Competition
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4.0 COMMON APPROACHES FOR SECOND STAGE COMPETITION
The following methods can be used to select a supplier or contractor for second stage
competition under a framework agreement:
4.1 Direct Purchase - for goods and services which are the same or very similar and
requirements can be easily defined for the user.
Conditions for use may include:
• Users must be able to easily determine which supplier is to be awarded the call-off
contract.
• Minimal work for users.
• Should secure best overall value for money for both single and multi-supplier
frameworks.
4.2 Ranked - for goods and services which are the same or very similar and requirements
can be easily defined for the user.
Conditions for use may include:
• Required for continuity of supply, if the supplier ranked No 1 cannot supply, users
can then call-off from the next ranked supplier until requirements have been met.
• May secure best pricing
• Lower ranked suppliers may never get any business
4.3 Rotation - for goods and services which may be similar in nature; however, availability of
supply may vary due to lack of capacity or required skills.
Conditions for use may include:
• Required to ensure continuity of supply where one supplier is unable to satisfy all
potential demand
• Higher administrative requirement for framework owner
• All suppliers likely to be awarded some business
4.4 Meets Requirements - where some of the products may be different or differ in use and
application, and not every supplier on the framework agreement, bid for all potential
requirements.
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Conditions for use may include:
• Users would be able to select the supplier(s) or contractor(s) who could meet their
requirement.
• If there is more than one supplier or contractor another method of call-off would
have to be used to determine which supplier should be awarded the call-off contract.
• May secure best stakeholder buy-in.
• May be viewed by suppliers or contractors that the users have degree of choice and
deliver poorer initial pricing.
4.5 Mini-competition - where the terms laid down in the framework agreement are not
precise or complete enough to determine which supplier is to be awarded the call-off
contract.
Conditions for use may include:
• Process for carrying out a mini-competition must be included in the Invitation to Bid
(ITB) and subsequent guidance for users.
• No scope for renegotiating original specification or applying selection criteria.
• If the option for mini-competition exists suppliers are unlikely to bid their best prices
in their tender to get on framework agreement.
Mini-Competition Process:
1. Prepare your Request for Quotation (RFQ)
2. Issue your RFQ
3. Evaluate responses and select supplier/contractor
4. Award the Purchase Order
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Section 5
Determining the Most Appropriate Type of
Framework Agreement
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5.0 DETERMINING THE MOST APPROPRIATE TYPE OF FRAMEWORK AGREEMENT
The circumstances of the given procurement will determine whether the use of a framework
agreement procedure is appropriate and, if so, its structure, such as the type of framework
agreement to be concluded, the scope of the framework agreement, the number of suppliers
or contractors’ and the role of a centralised purchasing body, if any. The link between the
circumstances of the procurement and various decisions on framework agreement procedures
should be clearly explained in the public body’s Procurement Strategy Development Form
[Link] .
In determining the most appropriate type of framework agreement a procuring entity may
consider the following:
1) Closed vs Open framework agreements. Closed framework agreements, where initial
submissions are evaluated, involve significant competition at the first stage (and may
or may not involve competition at the second stage). Open framework agreements, on
the other hand, do not involve the evaluation of indicative submissions at the first
stage—only qualifications and responsiveness are checked—so all the competition in
those framework agreements takes place at the second stage.
2) Defining the procurement need. How narrowly the procurement need can and should
be defined at the first stage will dictate the extent of competition that is possible and
appropriate at that stage. If precise specification of the procurement need is possible,
and if it will not vary during the life of the framework agreement, a framework
agreement without second-stage competition, will maximize competition at the first
stage and should produce the best offers. If the procuring entity’s needs may not vary,
but the market is dynamic or volatile, second-stage competition will be appropriate
unless the volatility is addressed in the framework agreement (such as through a price
adjustment mechanism).
Additionally, where several requirements are bundled together under one framework
agreement, the effect will be to provide flexibility for the procuring entity to finalise or
refine its statement of needs when the needs themselves arise. The description of the
procuring entity’s or several procuring entities’ needs in the initial solicitation will
therefore be less precise or will be diverse. This would generally imply competition at
the second stage (so that the relevant components from the bundle are identified for
the procurement at issue).
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3) Selection between a single-supplier or multi-supplier framework agreement.
o A single-supplier closed framework agreement has the potential to maximise
aggregated purchase discounts, given the likely extent of potential business for a
supplier or contractor, particularly where the procuring entity’s needs constitute a
significant proportion of the entire market, and provided that there is sufficient
certainty as to future purchase quantities (through binding commitments from the
procuring entity, for example). This type of agreement can also enhance security of
supply to the extent that the supplier or contractor concerned is likely to be able to
fulfil the total need.
o Multi-supplier framework agreements, which are more common, are appropriate
where it is not known at the outset who will be the best supplier or contractor at the
second stage, especially where the needs are expected to vary or to be refined at the
second stage during the life of the framework agreement, and for volatile and
dynamic markets. They also allow for centralised purchasing and can also enhance
security of supply where there are doubts about the capacity of a single supplier to
meet all needs.
5.1 Key Considerations in Developing Framework Agreements
Information that will help inform the procuring entity’s decision to establish a framework
agreement include:
2) Can the goods or services be defined?
3) Can the demand for the goods or services be identified?
4) Can the scope, volume and total value over the required period, be estimated?
5) Is there more than one entity that has similar needs i.e. will there be a single purchasing
entity or several purchasing entities?
6) Can the needs be aggregated?
7) What is the optimum duration of the framework agreement?
8) For goods, will it be more feasible to request item prices corresponding to estimated
quantities over the duration of the framework agreement, or corresponding to
indicative ranges of call-off quantities?
9) In the second stage of the framework agreement what method(s) will be used to select
a supplier for a call-off contract?
10) How will the contract price for the call-off contract be determined?
11) Under what circumstances can a supplier be removed from the framework agreement?
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Section 6
Using Framework Agreements for Emergency
Situations
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6.0 USING FRAMEWORK AGREEMENTS FOR EMERGENCY SITUATIONS
The period immediately after an emergency situation has occurred is critical and public bodies
are under a lot of pressure to respond quickly to the needs of its stakeholders. Procuring
entities will be deciding over the purchase of goods and services. On the one hand, these
purchases are urgently needed. On the other, there is a risk that value for money will not be
achieved if decisions are taken too hastily, in the absence of procedural safeguards.
One instrument that can be helpful in this kind of situation is a framework agreement.
This should be part of any country’s Disaster Risk Management Plan. Its aim is to have a
procurement system ready that responds quickly to an emergency. Special procurement
procedures for emergencies should be part of disaster management systems and should
especially include tailored framework agreements.
6.1 Conditions for Use:
Framework agreements can be used when planning for emergencies to mitigate the risks
posed by those emergency type situations. Framework agreements are suitable for the
procurement of goods, works or services for which the need is expected to arise in the future
on an emergency basis, such as medicines (where a significant objective is to avoid the
excessively high prices and poor quality that may result from the use of single-source
procurement in emergency situations). These types of procurement may require security of
supply.
The emergency framework agreements can encompass basic goods and services that are likely
to be used in response to a serious emergency. For example, it can include goods such as drugs
and medical supplies, emergency housing, fuel, mattresses, blankets, food and water, and
equipment to be used during flooding or other natural disasters. The agreement will define
prices, distribution/delivery conditions and other complementary criteria. This will enable
procuring entities such as the Regional and Municipal Corporations, those from the energy
sector or the medical services to issue purchase orders against the agreement within minutes
of an emergency.
6.2 Procedures for Establishing Framework Agreements Under Emergency Situations:
1. Identify all procurement activities for the upcoming fiscal year as identified in the
Annual Procurement Plan (see General Guidelines: Developing the Annual
Procurement Plan). This will reduce the number of cases of ‘emergency’ procurements
and the resultant less competitive methods of procurement.
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2. Request for authorisation, at any time, to enter into the procurement contract or
framework agreement on the ground that “urgent public interest” considerations so
justify.
3. Engage in a framework agreement procedure by virtue of the nature of the goods,
works or services being procured and the needs that arise on an urgent basis during a
given period of time.
Urgent public interest considerations refer to issues that can negatively affect the rights of the
citizens of Trinidad and Tobago, e.g. the collapse of a bridge which will hinder the free movement
of citizens to and from their homes. In that regard, urgent public interest considerations can be
applied to the procurement of a short-term solution such as the installation of a temporary bridge,
while the details of a long-term solution are being worked out.
4. The amount procured using emergency procedures should be strictly limited to the
needs arising from that emergency situation.
5. The decision of a procuring entity that urgent public interest considerations exist and
the reasons for the decision shall be included in the record of the procurement
proceedings.
Diagram - Procedures for Establishing Framework Agreements Under Emergency Situations:
Identify all procurement activities for the upcoming fiscal year as identified in the Annual
Procurement Plan
Request for authorisation, at any time, to enter into the procurement contract or
framework agreement on the ground that “urgent public interest”
Engage in a framework agreement procedure by virtue of the nature of the goods, works
or services being procured
The amount procured using emergency procedures should be strictly limited to the needs
arising from that emergency situation.
The decision and reasons shall be included in the public body record of the procurement
proceedings.
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6.3 Key Considerations
There are a few considerations in the design of a framework agreement that are important
under emergency situations. These include:
6.3.1 Delivery capacity: In case of emergency, firms could themselves be affected by the
emergency. In serious situations, the firms inside the agreement may be unable to produce
and distribute. In some cases, it could be the lack of supplies for their own production that
could create bottlenecks. Reducing this risk is important. Before an emergency occurs, it
should be mandatory to know how resilient each vendor is when faced by a crisis. Another
strategy is diversification. Having as many vendors as possible will help. Even better is if some
of the vendors are from nearby countries that may be unaffected by the emergency.
Price speculation: During emergencies it is common to see some vendors trying to maximise
prices. They will argue that this is justified by increased demand and supply shortages. Even
suppliers with framework agreements might be tempted not to honour the contract issued
through call-off and seek to increase their profits by selling at higher prices. The procuring
entities must be tough on these kinds of cases. The cost to the supplier of not fulfilling the
agreement must be significant, and must be captured in the terms and conditions of the
framework agreement. Setting ceiling prices can protect from price hikes during periods of
high demand. Additionally, again, diversification is also advantageous.
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REFERENCES
2021, The Public Procurement and Disposal of Public Property (Procurement Methods &
Procedures) Regulations, 2021. Available at: [Link]
2021, General Guidelines, Procurement Methods and Procedures. Available at:
[Link]
2021, Guidebook for Setting-up and Operating Framework Agreements. World Bank Group.
Available at:
[Link]
[Link]
2020, Fourth Edition, Procurement Regulations for IPF Borrowers. Procurement in
Investments Project Financing Goods, Works, Non-Consulting and Consulting Services. The
World Bank. Available at:
[Link]
2018, Framework Agreements – An overview of how to design, establish and operate a
Framework Agreement in Investment Project Financing. The World Bank. Available at:
[Link]
0290022018/original/[Link]
2015, Public Procurement and Disposal of Public Property Act 2015, as amended. Available at:
[Link]
terBy=Go
2014, Guide to Enactment of the UNCITRAL Model Law on Public Procurement. United
Nations. Available at: [Link]
documents/uncitral/en/[Link]
2010, How to undertake a mini competition under a framework agreement. Advanced
Procurement for Universities & Colleges. Available at: [Link]
[Link]/docs/[Link]
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GLOSSARY OF TERMS
The Glossary of Terms is available on the OPR’s website at [Link]
procurement-retention-disposal/
LIST OF ACRONYMS
The list of Acronyms is available on the OPR’s website at [Link]
procurement-retention-disposal/
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