Dynamic Purchasing Systems (DPS) and framework agreements are two of the simplest procurement processes used by public sector organisations. They both have the same primary benefits, quicker supplier selection and faster contract implementation, but there are a few differences public sector buyers need to consider when deciding between a Dynamic Purchasing System and framework agreement.
We’re going to look at DPS and frameworks separately and then compare their features so you can see which process suits your procurement needs.
What is a Dynamic Purchasing System?
A DPS is similar to a framework in that suppliers have to qualify to land a place in a pool of other approved candidates. Buyers select the business that best fits the contract’s requirements. Sometimes, buyers hold a mini-competition to select the supplier with the best value.
That’s where the familiarity ends.
DPS remain open to suppliers. Basically, they can join the system at any time during the contract. Frameworks have a definite entry period, and once it’s closed, that’s it. Suppliers have to wait for the next contract to apply for pre-qualification.
Due to its simplicity and flexibility, a DPS is perfect for SMEs and new suppliers who want to get into public procurement. The way in which DPS are set up ensures transparency, which is one of the new priorities contained in the Procurement Act 2023.
What is a Framework Agreement?
As we’ve said, procurement framework agreements and Dynamic Purchasing Systems are very similar. However, the elements in frameworks are fixed. In a nutshell, public sector buyers use frameworks to build a pool of pre-approved suppliers who have an opportunity to win current and future contracts. Requirements, including pricing, are preset, providing certainty and stability in the procurement process.
Some frameworks limit the number of pre-qualified suppliers, usually sticking to a maximum of ten. This means competition to join frameworks is fierce, which is great for public sector organisations because stiff competition encourages innovative solutions as suppliers vie to provide the best value within the framework’s limitations.
It’s important to note that buyers aren’t obliged to award contracts to all the suppliers on the framework. However, the limited number of suppliers makes engagement easier and allows relationships to develop.
Benefits of Using a Dynamic Purchasing System
Here are three primary advantages for buyers who use a DPS.
Streamlined Procurement Process
There’s no lengthy tendering process because suppliers are pre-approved. Their suitability and qualifications are established right at the beginning of the process.
Diversity Among Suppliers
The systems are inclusive and encourage a diverse range of suppliers to apply. This strengthens the supplier pool and ensures buyers always have options should any suppliers fall by the wayside.
Flexible and Agile
Dynamic Purchasing Systems are flexible by allowing suppliers to join at any point during the contract. Their contracts tend to be shorter than frameworks and more traditional procurement methods. This makes them more agile and enables them to adapt relatively quickly to market changes or fluctuations in demand.
Benefits of Using a Framework Agreement
Here are three primary advantages for buyers who use framework agreements.
Streamlined Procurement Process
The fixed terms and conditions of a framework agreement simplify procurement by removing some of the administrative burden in the tendering process. This makes it more efficient and provides a faster route to market.
Long-Term Supplier Relationships
The limited number of suppliers facilitates relationship building. Even if only some of the suppliers actually win contracts, there are still opportunities for collaboration, knowledge sharing, and innovation. This also filters down the supply chain, providing stability and maintaining the organisation’s priorities, goals, and values.
Fixed Pricing
Pricing is often negotiated within certain parameters. Negotiations tend to favour buyers, which helps manage costs and ensures budget predictability.
DPS or Frameworks: Which Suits Your Needs?
There are times when the advantages of frameworks make it illogical to use any other procurement method. And then there are times when DPS do the trick. The trick is to know when to use which approach.
Here are three key considerations to guide your decision.
Contract duration: If you’ve got a long-term contract with fixed pricing, then a framework is best. If you anticipate changes in the market, then you need the flexibility of a DPS.
Supplier availability: If you need a limited number of local suppliers you can trust and with whom you can build long-term relationships, then frameworks are for you. If you prefer supplier diversity and want to encourage healthy competition, then you should try a DPS.
Scale: It takes quite a lot of time and tech know-how to run a Dynamic Purchasing System, so it’s only really worthwhile if the scale of the exercise warrants it.
Technology for DPS & Framework Management
For all their convenience, DPS and framework agreements need some high-tech management solutions. Delta eSourcing provides a procurement platform that streamlines both processes, ensuring you fully enjoy the benefits available.
Some of the benefits of our DPS include the following:
- Easily manage different aspects of tender exercises, including tender alerts, request for quotes (RFQ), mini-competitions, direct awards, and end-to-end DPS exercises.
- Manage a large, refreshable pool of suitable suppliers.
- Evaluation automation
- Shorter tender award processes.
- Enhanced efficiency as mini-competitions don’t need to be advertised and there is only one supplier approval process.
If you think you might need a DPS or framework agreement but aren’t sure which one suits your needs, contact Delta eSourcing and book a free demo. We’ll help you choose the option that delivers the best results.
