The EC Public Sector Directive (2004/18/EC) defines a framework agreement as "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, in particular with regard to price and, where appropriate, the quantity envisaged." The Directive (Article 32) further specifies that a framework agreement should not have a duration of more than four years.

I was under the impression that, under the old Directives, the contracting authorities were not limited in the duration of contracts. For instance, a contracting authority could award to a company a maintenance contract of unlimited duration, under which it could place individual orders for the maintenance of the items covered by the contract.

Was I wrong? Is this practice now forbidden by the new Directive?

If this is the case, then - contrary to what the Commission stated in its initial proposal for a new Directive - this is not increased flexibility at all.

Any thoughts?

Baud

Hello.

This is just a quick thought and actually not directly related to framework contracts :) but see what the ECJ has said in Pressetext: "the practice of concluding a public services contract for an indefinite period is in itself at odds with the scheme and purpose of the Community rules governing public contracts ..." (C-454/06)

A unreasonably too long contract term probably would bring about the same "dangers" as an indefinite one. So - as I said - no direct applicability here, but may be there's a similar rationale for the four year limit?

Mari Ann.

Hi,

I guess that framework contracts have always been limited in duration... (now, 4 years). As per EC terms, "framework" contract procedure does not automatically yield a contract. after public consultations and internal evaluations, this process yields a set of shortlisted firms in each of several domains or lots. Specific procurement requirements during the course of this frramework process will be sent to a number of those firms to submit particular prices, profiles, etc...

Hence, the limitation on duration is supported by the following thoughts:
1- market changes and fluctuations may alter conditions, prices, competition (requiring a republication in 4 years)
2- an unlimited framework contract transforms a competitive market into an oligopoly
3- market changes may impact shortlisted firms strongly rendering some out of business and others way overloaded, thus making the framework arrangement useless.
4- contracts/projects... are unique "temporary" endeavours (as per PMBOK); unlimited or excessively long-durations would inevitably cause more and more trouble!

Ins hort, I believe that the 4 years is the bracket (similar to the bracket provided by the EC for "Dynamic Purchasing Systems") within which tens or hundreds of contracts will be signed. Major economic or market changes may force the EC to terminate such a framework unmbrella and relaunch another; this should always be an option.

Best,
Youssef Saad