Framework Agreements

&
Public Private Partnerships

Robin Kumar Thakur

Procurement Specialist
The World Bank
 Part-I
Framework Agreements
Framework Agreements
 Framework Agreement (FA) is a long-term agreement established with
one or more firms that sets the terms and conditions that will govern
any contract awarded during the term of the FA (a call-off contract)
 The terms and conditions will usually include the fee rate or pricing
mechanism
 FAs may be established for the anticipated procurement of Goods,
Works, Non-consulting Services or Consulting Services, as and when
required, during the currency of the FA
 FA does not commit either party to procure or supply products or
services. FA firms have no guarantee of any call-off contracts
Framework Agreements
 FA provides a fast and efficient way to procure
 FA can be concluded with a single provider or with several providers.
The Borrower may decide the strategy based on the market conditions
and its requirements
 A multi-supplier FA allows selection from a number of firms, helping to
ensure best VfM
 Number of firms should be proportionate to the anticipated demand to
allow fair opportunity to be awarded a call-off contract
 FAs shall only be used between the Borrower’s procurement entities
and the FA firms
Framework Agreements
 FAs may be pre-existing or newly established
 Borrower’s Pre-existing FA: the Bank shall be satisfied that the FA is
consistent with the Bank’s Core Procurement Principles
 New FA: a new FA to be established by the Borrower shall meet the
requirements of Procurement Regulations
 If the Bank and a UN Agency have established FA, the Borrower
may use it for entering into a contract with the UN Agency
 In brief, FAs are contractual arrangements for fixed or variable
volumes of products or services provided over a fixed period
Framework Agreements
 FAs may be appropriate under the following circumstances
 frequent reordering is based on the same, or similar
requirements, or set of specifications
 where different entities of the Borrower procure the same Goods,
Works, Non-consulting Services or Consulting Services, and
aggregating the demand could lead to discounts
 planning for Emergency Situations
 no single firm is considered to have sufficient capacity
Framework Agreements
 In case of specialised commodities
 A framework arrangement may be established and a list of Bidders drawn to
whom periodic invitations to Bid are issued
 FA firms may be invited to quote prices linked to the market price at the time
of, or prior to the shipments
 bid validities could be as short as possible
 single currency in which the commodity is usually traded in the market may
be used
 Standard Contract Conditions consistent with market practices may be used
Establishing Framework Agreements
 Framework Agreement involves the following two stages
 Stage 1: Competitive selection of and finalisation of FA with terms
and conditions set out in the FA
 Stage 2: Award of call-off contracts based on terms and conditions
set out in the Framework Agreement
Establishing Framework Agreements
 In order to establish a FA, open competitive procurement with
Bank’s SPD for framework agreements shall be used
 Once a FA is established, individual contract opportunities to be
awarded as call-offs, are not advertised
 Additional information in the RFB/ RFP documents shall include:
 a description of the G, W, NCS or CS that the FA is intended to cover
 an estimate of the total volume/scope of supplies for which call-off contracts
may be placed and, as far as possible, the volume/scope and frequency of the
call-off contracts to be awarded under the FA
Establishing Framework Agreements
 Additional information in the RFB/ RFP documents contd..
 qualification and evaluation criteria and, evaluation methodology
 the terms and conditions of the contract that will apply to call-offs under the
FA
 the secondary procurement method(s) that shall be used to select a firm (the
call-off process)
 the duration of the FA, including any option to extend
 FAs shall be established for a maximum period of three (3) years, with the
option to extend by up to a further two (2) years, if the initial engagement
has been satisfactory
Establishing Framework Agreements
 Terms and conditions that will apply to call-offs under the FA
shall include the following:
 fees or pricing mechanism, and any other associated costs that shall be
agreed with each firm and shall be valid for the term of the FA
 that the Borrower will engage FA firms, as required, through call-off
contracts
 whether the FA is
• a closed panel (where the constitution of the panel shall remain unchanged,
other than firms being removed from the panel); or
• an open panel with an outline of the process for such selection
Establishing Framework Agreements
 Terms and conditions that will apply to call-offs under the FA
contd..
 that there is no guarantee of being awarded a call-off contract, and no
commitment will be made with regard to possible volume of products and
services to be provided
 that the FA is not an exclusive agreement and the Borrower reserves the
right to procure the same or similar G, W, NCS or CS from non-FA firms
 description of the circumstances that may lead to a firm being removed from
the FA, and the process that shall be used for such removal
Establishing Framework Agreements
 The Borrower shall issue a Notification of Intention to conclude FA
 Standstill Period shall apply at the time when FA is established
 Public notice of the conclusion of the FA shall list the names of all
firms that have been included in the FA
 If a complaint is received from an unsuccessful Bidder/Consultant
within the standstill period, it shall be addressed before
concluding the FA
 Standstill period shall not apply to any call-off process among the
FA firms
Call-off Contracts
 For each call-off contract, a firm shall be selected from the panel using the
secondary procurement process(es) described in the FA
 The secondary procurement process (for call-off contracts) shall take one or
both of the following forms:
 mini-competition based on criteria for call-offs described in the FA, such as
i. competitive quotes (RFQ) from some or all of the panel members, and based
on the lowest evaluated cost;
ii. competitive Bids or Proposals (RFB or RFP) from some or all of the panel
members, based on expertise, proposal solutions and value for money;
and/or
Call-off Contracts
 The secondary procurement process contd..
 direct selection based on objective criteria for call-offs that have been
described in the FA, such as;
i. location where call-off contracts are awarded to the firm that is best able to
deliver based on its location and the location where the G, W, NCS or CS are
to be delivered
ii. balanced division of supply/scope/task where an upper value limit is fixed
and call-off contracts are awarded in turn on a rotational basis when a firm
reaches the upper value limit
Call-off Contracts
 As part of the call-off process, firms shall be given a description of
the scope of supply/tasks that they will be expected to provide
 The purchase order to be issued as part of the call-off process
shall specify the objectives, tasks, deliverables, timeframes and
price or price mechanism
 The price for individual call-off contracts shall be based on the
fees, or pricing mechanism detailed in the FA
 Part-II
Public Private Partnerships
PPP Requirement
1. In a PPP arrangement, the Borrower undertakes the following
project phases:
a. project assessment;
b. project structuring;
c. selection of the private partner; and
d. contract management.

2. The Borrower shall demonstrate that there is adequate

institutional capacity to prepare, structure, procure and manage the
PPP project
Project Assessment –Economic & Financial Analysis
1. whether the underlying project is adequately justified, on the
basis of a sound and quantified economic analysis the project
presents best VfM, i.e., is cost-benefit justified, and the approach
to delivering the benefits, considering the relevant technical,
legal, financial and environmental constraints, irrespective of
implementation as a PPP or through other public sector
procurement;
2. whether the project’s overall revenue requirements are within
the capacity of users, the public authority, or both, to pay for the
infrastructure service;
Project Assessment: Economic & Financial Analysis
3. project risks were identified and assessed and that mitigation
measures were considered, and that the residual fiscal risk will not
jeopardize fiscal sustainability;
4. chosen PPP scheme (i.e., risk-allocation matrix, pay and performance
mechanism) resulted from the consideration of alternative PPP
schemes and other procurement options; and
5. commercial viability, that is, whether the project is likely to be able
to attract good-quality sponsors and lenders by providing robust and
reasonable financial returns
Project Structuring- Output Specification
1. clear performance targets and output requirements that are
specific, measurable, achievable, realistic, and time bound;

2. how performance will be monitored, including roles for the

government’s contract management team, the private partner,
external monitors, regulators, and users; and

3. the consequences for failure to reach the required performance

targets, clearly specified and enforceable.
Project Structuring- Risk Allocation & Payment Mechanism
Risk Allocation
Based on the contractual provisions, a risk matrix shall be presented by the
Borrower to the Bank, exhaustively listing project risks and their appropriate
allocation to the contractual parties or to third parties are made efficiently.

Performance Payment Mechanism

The Borrower shall develop a payment and performance mechanism that sets
out the principle of performance-based payments upon meeting the provision
of contractual assets and service at the agreed service level and service
schedule.
Selection of Private Player
Open competition is the Bank’s preferred procurement approach.
Exceptionally, the Bank may agree to a non-competitive selection process. The
Borrower selects the private partner according to the requirements set out in
Paragraph 6.43 of Procurement Regulations.

PPP activities whose procurement processes have been initiated or contracts

have been awarded may be financed by the Bank, if the Bank is satisfied with
the project justification, feasibility, PPP structure requirements, contract
arrangements and the consistency of the selection process for the private
partner with the Bank’s Core Procurement Principles and Sections I, II and III
of these Procurement Regulations, and the compliance with the Bank’s Anti-
corruption Guidelines.
Unsolicited Proposals

1. The Bank may agree to finance PPP projects initiated from unsolicited
proposals

2. The process to assess and determine the best fit-for-purpose and VfM
approach to awarding a contract initiated by an unsolicited proposal shall
be clearly defined by the Borrower.
 Unsolicited Proposals
When an unsolicited proposal is subjected to a competitive selection process, the
Borrower may use one of the following approaches in allowing the firm that
submitted the unsolicited proposal to participate in the process:
a) The Borrower grants no advantage to the firm in the process. The Borrower
may separately compensate the firm if permitted under Borrower’s
applicable regulatory framework; or

a) The firm is granted an advantage in the selection process, such as a point

bonus in the evaluation or a guaranteed access to the second stage of a two-
stage process. This advantage shall be disclosed in the request for bids/
request for proposals document and defined in such a way that it does not
prevent effective competition.
Typical PPP Structure
Flow of Funds
Online Resources
 Annex-XIV (Public Private Partnership) and Annex- XV (Framework
Agreements) of Procurement Regulations.

 Guidance on Framework Agreements

 Request for Bids - Goods - Framework Agreement (1 envelope process)

(Please note this is a Trial Version Document)

 PPP Reference Guide

THANK YOU
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