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As defined by the Public Contract Regulations (2015), a framework agreement is “an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period…”.
Also known as a ‘Master Services Agreement’ (“MSA”) and often used by government bodies and large corporations, framework agreements provide the supplier and customer with ‘the bigger picture.’ Generic terms of the contract will be contained within the framework, including commitment levels, supporting clauses such as data protection and intellectual property, and boilerplate clauses such as governing law and third-party rights.
The framework, or MSA, will be used to indicate the primary terms of the agreement and will govern the relationship between the two parties. However, specifics such as price, payment, and the list of goods and/or service to be supplied may be subject to a separate set of terms found in a call-off contract (“order”).
Framework agreements on their own will not be ‘live’ until work is carried out under an order of that framework. Depending on the provider of the framework, the order will be submitted by the customer, on the terms of the framework, and will also include further specifics relating to the relevant goods and/or services.
Private sector frameworks are often entered into when two parties are looking to contract with each other on multiple occasions throughout a specified term. Having a single ‘master’ document is an efficient way of dealing with one another, where 90% of the terms are already agreed and shall apply to each individual order.
However, public sector frameworks operate slightly differently. Although the operation of the framework is the same, the public body then invite bids from other organisations in an attempt to ‘win’ work under a separate call-off contract. However, there is little room for negotiation on public sector frameworks and the work is often provided on a ‘take it or leave it’ basis.
When negotiating the terms of a framework agreement, there are a number of issues to look out for, the major point being consistency. When working with a framework agreement and a separate call-off contract, both sets of terms must marry up and both sides must understand which term(s) apply in the event of a conflict.
It is good practice to have a ‘conflict’ or ‘precedence’ clause inserted into a framework agreement. This clause ensures that there is an order of priority with regards to both documents, which is specifically useful if terms within both documents conflict. generally speaking, if terms of a framework agreement are subject to the contents of a call-off, the clauses will reflect this as such. However, if for example payment periods conflict within both documents, there must be a mechanism to decide which one shall prevail.
The second major point when working with frameworks and call-offs is ensuring both documents relate to one another. If the terms of the framework are not properly incorporated into the call-off, then the framework terms may not apply. Incorporation by reference is vital if wanting to rely on both documents in a court of law.
More generally, it is important to ensure key clauses in a call-off reflect the original position in the framework. although frameworks may include general commitments regarding service levels, liabilities, and termination, a call-off may include added commitments which are more specific to that individual order. Conflicts may be overridden by the framework stating the call-off terms shall prevail. although the framework may provide reasonable and favourable terms, if they are the subject to call-off terms then such terms in the framework shall be redundant.
There are a number of factors to consider when entering into a framework agreement and such documents can often be complex and lengthy. Depending on the other contracting party, negotiation may not be possible, but it is still strongly recommended that you seek legal advice in order for you to understand the contents of the framework and call-offs and to ensure that in the event of a dispute, you can rely on terms of both documents.
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