Copyright: G. Sarin, Feb. 2026

The letting of contracts for construction and engineering works by public bodies in the United Kingdom is regulated by primary and secondary legislation. The Procurement Act 2023 defines a framework as a: ‘contract between a contracting authority and one or more suppliers that provides for the future award of contracts by a contracting authority to the supplier or suppliers.’

Legal Features of Frameworks

Framework agreements are contracts that serve as an “umbrella” between one or more buyers and one or more suppliers, outlining the terms—namely, price, quality, and quantity—that govern individual contracts, referred to as “call-offs,” which are to be awarded over a specified duration. These agreements are prevalent in both public and private sectors, aimed at streamlining procurement processes and nurturing long-term relationships with suppliers.

The essence of a framework agreement lies in its function as a structure that delineates the contractual terms applicable to future orders for the goods, services, or works encompassed by the framework throughout its active period. The Public Sector Directive’s provisions regarding framework agreements have not only clarified their availability but have also imposed restrictions and controls on their application, alongside introducing uncertainties regarding the legal regulations. Although a framework agreement may not constitute a legally binding contract for the purchase of goods on its own, it represents a legally binding commitment to comply with the agreed-upon terms and conditions for subsequent call-offs.

An additional characteristic of a framework is that distinct, legally enforceable agreements (referred to as “call-offs” or “statements of work”) are formulated independently for particular orders. Generally, they do not guarantee any specific volume of business or demand, reducing risk for the buyer.

Frameworks are typically limited to 1–4 years, although some can last up to 8 years in specific contexts like the UK Procurement Act 2023. Within a ‘closed framework’, the maximum allowable duration for a standard framework agreement is four years. However, exceptions exist for frameworks pertaining to specific sectors, such as defense and security or utilities, which may extend for a duration of up to eight years. The rationale for this is that a term surpassing four years is only acceptable if the contracting authority provides justification for a longer duration based on the nature of the works involved, and this justification must be clearly articulated in the tender or transparency notice.

The Procurement Act 2023, which took effect on 24 February 2025, introduces the concept of ‘open frameworks.’ These frameworks permit an extended duration, accompanied by specific requirements for reopening, or ‘refreshing.’ An open framework may extend for a maximum period of eight years. A Reopening Schedule has also been established. The framework is required to be reopened for new suppliers at least once within the initial three years, and at least once during the subsequent five years prior to the conclusion of the agreement. The overall open framework represents a series of successive, shorter-term frameworks (for instance, 2-year terms) that operate consecutively, with each framework expiring as the next one commences.

In the public sector, organisations and governmental bodies are subject to strict procurement regulations, such as the EU Procurement Directives or the UK Procurement Act 2023. These regulations aim to ensure a fair and competitive bidding process that promotes transparency and non-discrimination among potential suppliers. This commitment to equity not only fosters trust in public procurement processes but also encourages a diverse range of participants, thereby enhancing the overall quality and efficiency of goods and services procured. Adhering to these guidelines is essential for maintaining public confidence and ensuring that taxpayer money is spent wisely and responsibly.

Frameworks encompass vital clauses that tackle liability limitations, warranty provisions, and termination rights, all of which are essential for protecting the interests of both parties engaged in an agreement. These clauses carefully delineate the limits of liability, ensuring that neither party bears responsibility for losses that surpass established thresholds, thus effectively reducing potential financial risks that may emerge during the partnership.

Warranty clauses are designed to offer clear assurances regarding the quality and performance of services or products, explicitly detailing any guarantees provided and establishing expectations for both parties involved. Moreover, termination rights are of considerable significance as they outline the specific conditions under which an agreement may be terminated. This provision enables either party to withdraw from the contract in a systematic and predictable manner if certain conditions are fulfilled, which is crucial for sustaining stability in business relationships.

By incorporating these essential elements, frameworks not only foster a balanced and equitable environment for collaboration but also cultivate a climate of trust and transparency that persists throughout the partnership, ensuring that both parties can engage with confidence as they strive towards their common objectives.

Commercial Features of Framework Agreements

By bundling purchasing volumes into consolidated agreements, organisations can effectively achieve significant cost savings ranging from 5% to 15% in comparison to relying on individual or ad-hoc contracts. This strategic approach not only streamlines procurement processes but also enhances overall cost efficiency. When various departments or business units collaborate to combine their purchasing needs, they create stronger negotiating power, allowing them to secure more favourable terms from suppliers. Such collaboration minimises the administrative burden associated with managing multiple contracts and fosters a more cohesive purchasing strategy, ultimately contributing to more sustainable financial management within the organisation.

Frameworks play a crucial role in significantly reducing administrative costs and effectively shortening procurement cycles. This is achieved through the one-time negotiation of foundational terms, such as insurance, liability, and standard specifications, which are essential for any contract. By adhering to this streamlined approach, organisations can enhance operational efficiency while also allowing for more effective allocation of their resources. This not only facilitates smoother operations but also leads to improved overall productivity, as tasks can progress with less interruption and confusion. 

Establishing clear and consistent terms at the outset provides a solid foundation for all parties involved. It minimises the potential for disputes and misunderstandings that could arise further along in the contracting process. As organisations embrace frameworks, they position themselves not only to save time and money but also to establish stronger, more trustworthy relationships with partners and suppliers—strengthening their overall market position.

Frameworks typically include various mechanisms for adjusting prices in order to manage market volatility. These mechanisms play a crucial role in maintaining stability within financial systems, as they enable real-time responses to fluctuations that are often driven by an array of factors, including shifts in supply and demand, changes in consumer behaviour, and evolving external economic indicators. By implementing strategies such as dynamic pricing or price banding, these frameworks can significantly mitigate the adverse effects that sudden market changes can produce. Such approaches not only protect businesses from potential losses caused by unexpected downturns but also instil a sense of confidence among consumers. This heightened confidence contributes to a more resilient market environment, thereby fostering a sense of trust that is vital for economic interactions.

Furthermore, the ability to adapt prices swiftly in response to prevailing market conditions also encourages healthy competition among businesses. As companies strive to optimise their pricing strategies, they often innovate in service offerings and product quality, benefitting consumers with better choices. The implementation of these proactive approaches does not merely enhance immediate financial outcomes; it also contributes to the overall health and sustainability of economic systems. By promoting long-term growth and stability, these frameworks create a robust economic ecosystem capable of weathering future uncertainties, ultimately ensuring that both businesses and consumers thrive, even in challenging times.

Some frameworks include a ‘call-off’ function, which allows buyers to cancel or adjust services and goods as needed. This flexibility helps businesses respond to changing market demands and consumer preferences. By having the option to modify orders, companies can improve their purchasing strategies, leading to better efficiency and cost-effectiveness. This adaptability helps ensure that businesses are not overly committed to products that no longer fit their goals, allowing them to manage procurement and inventory more effectively. Ultimately, this approach helps buyers align their purchases with strategic priorities, maintain competitiveness, reduce waste, and maximise resource use.

Long-term collaboration among stakeholders nurtures productive relationships that can significantly enhance the quality of goods and services provided. When organisations and suppliers work together consistently over an extended period, they cultivate not only trust but also a deeper understanding of each other’s strengths, weaknesses, and expectations. This ongoing engagement fosters a rich synergy that frequently translates into improved performance. As both parties are driven to align their objectives and innovate collaboratively, they can explore new avenues for growth and efficiency.

Partnerships stabilise supply chains and promote best practices, resulting in operational efficiencies. Regular communication helps stakeholders adapt to market changes and fosters creative problem-solving, driving continuous improvement and competitive advantage.

Framework vs. Contract for a Single Project

In contrast to a standard contract for a single project, which usually specifies exact quantities and delivery schedules for a single transaction, a framework agreement functions as a flexible enabling tool that allows for multiple, recurring transactions over an extended timeframe. This form of agreement empowers the involved parties to partake in a range of business activities without requiring an upfront commitment to acquire a set quantity of goods or services. Rather, it provides an adaptable framework intended to respond to changing needs and situations, thus fostering ongoing collaboration and facilitating efficient procurement processes.

Key Disadvantages of Using Frameworks

Adopting a new framework can be challenging for many organisations due to its steep learning curve. To implement it successfully, organisations need to invest a lot of time and resources to learn the specific rules and best practices that come with the framework. This training and adjustment can cause delays in the early development stages as teams navigate through new processes and terms. Alternatively, organisations could rely on specialist procurement teams, but this option may increase overall costs.

Frameworks can limit market access by allowing only a select group of pre-qualified suppliers. This can exclude innovative companies, new entrants, or small and medium-sized enterprises (SMEs) that bring fresh ideas. By narrowing the contributor pool, frameworks may reduce competition and slow the introduction of new solutions. Favouring established suppliers can also limit diversity in services and products, hindering growth and efficiency. It is important to find a balance that ensures quality and reliability while promoting innovation and including a wider range of suppliers.

Buyers may be tied to certain suppliers and contracts for up to four years, which makes it hard for them to adjust to changing market conditions or to seize better pricing from other vendors. This limitation poses a challenge for businesses needing flexibility to respond to economic changes. The inability to switch suppliers or renegotiate contracts can result in missed chances and lower competitiveness. Therefore, buyers should think carefully about their options and the long-term effects of such commitments, particularly in a fast-moving market where being adaptable can lead to success.

In some markets with limited competition, prices can be higher than in more competitive ones. This can reduce the value for money for consumers. When businesses do not face enough competition, they may not feel the need to improve or change their prices. This can lead to lower quality products and higher prices. Therefore, it is important to create a competitive environment that promotes fair pricing and better choices for consumers.

Joining organisations, maintaining accreditations, and securing places in competitive frameworks can be very costly and complex for small and medium-sized enterprises (SMEs). These challenges make participation difficult and cause financial strain that many SMEs struggle to handle. This increases administrative work, distracting them from their main business tasks. The ongoing need to meet accreditation standards can further limit these businesses’ abilities to engage in their industries. Therefore, there is a need for easier participation processes and lower costs to create a more inclusive environment for SMEs.

Frameworks can be misused by buyers when they rely too much on one vendor, which reduces the benefits of encouraging competition among suppliers. This limited focus can restrict choices in pricing, innovation, and quality, creating inefficiencies that undermine the advantages of the framework. Buyers may miss opportunities for improvement and cost savings, affecting the success of their projects. Additionally, not engaging multiple vendors can weaken market dynamics and may lead suppliers to become complacent, reducing their motivation to enhance offerings or provide competitive prices.

Once a framework is in place, changing its scope or suppliers becomes difficult, causing issues for projects that may need to adapt quickly. This rigidity can hinder creativity and responsiveness to new challenges. Therefore, it is important to design frameworks with flexibility for future changes.

For suppliers, being part of a framework doesn’t guarantee contracts or income. They must understand that actual business depends on various factors including competition and meeting clients’ needs. Continuous marketing and relationship building are essential for success within a framework.

Summary

Choosing suitable procurement tools for specific activities is crucial, as every route offers distinct advantages tailored to various business requirements. Organisations must take the initiative to thoroughly assess their needs, considering factors such as budget constraints, project timelines, and resource availability. By doing so, they can develop a procurement strategy that not only addresses immediate necessities but also aligns with their long-term goals. This strategic approach enables organisations to make informed decisions that can enhance operational efficiency and drive sustainable growth. Ultimately, a well-defined procurement strategy is key to achieving both short and medium-term objectives while laying a solid foundation for future success.