Framework Agreement
A framework agreement establishes the terms and conditions under which specific purchases can be made during a defined period, typically up to four years. Framework agreements are one of the most important procurement instruments in Finland, used extensively by central purchasing bodies like Hansel Oy and KL-Kuntahankinnat Oy, as well as individual contracting authorities. They account for a substantial share of total public procurement spending in Finland — Hansel alone manages framework agreements worth over EUR 900 million annually. For suppliers, winning a place on a framework agreement can provide a steady stream of public sector business over multiple years. However, the commercial reality differs significantly depending on whether the framework involves a single supplier (direct ordering) or multiple suppliers (mini-competitions). Understanding the structure, ordering mechanisms, and competitive dynamics within framework agreements is essential for realistic business planning and effective participation.
Definition
A framework agreement is an agreement between one or more contracting authorities and one or more economic operators that establishes the terms governing contracts to be awarded during a given period, particularly regarding price, quality, and estimated quantities. It is regulated by Sections 42-44 of the Finnish Public Procurement Act (1397/2016), implementing Article 33 of EU Directive 2014/24/EU. Framework agreements are established through a standard procurement procedure (open, restricted, or negotiated) and then used for ordering during their validity period. Three main models exist. In a single-supplier framework, all orders go to one supplier at the agreed terms — no further competition occurs. In a multi-supplier framework with fixed ranking, orders follow a priority sequence (the highest-ranked supplier is offered each order first). In a multi-supplier framework with mini-competitions, the contracting authority runs a simplified competitive process among framework suppliers for each specific order, using criteria defined in the framework agreement. The maximum duration is generally four years, including option periods, as stated in Section 42. Longer durations are permitted only in exceptional, duly justified cases — for example, when the subject matter requires significant investment that cannot be amortized within four years. Individual contracts awarded under the framework must stay within the scope, terms, and conditions established in the original framework. The contracting authority cannot substantially modify the terms when placing orders. New suppliers cannot join an existing framework agreement after its conclusion — this is a fundamental difference from a dynamic purchasing system.
Practical Example
Hansel Oy, Finland's central purchasing body, establishes a framework agreement for IT consulting services (CPV 72000000) with an estimated total value of EUR 50 million over four years. The procurement is run as an open procedure on Hilma and TED. Suitability requirements include minimum annual turnover of EUR 2 million, at least ten public sector IT consulting references, and ISO 9001 certification. Forty companies submit tenders; eight are selected for the framework based on their quality scores and pricing. The framework operates with mini-competitions: when a government ministry needs IT consulting, it sends a mini-competition request to all eight framework suppliers describing the specific assignment, required competencies, and timeline. Suppliers have 10 working days to respond. The ministry evaluates responses using criteria defined in the framework — typically 60% consultant quality (CVs, relevant experience) and 40% price. Over the four-year period, approximately 200 individual assignments are awarded through these mini-competitions, with annual volumes varying from EUR 10-15 million.
Common Mistake
Suppliers frequently assume that winning a place on a multi-supplier framework agreement guarantees revenue. In reality, a framework position only guarantees the right to participate in mini-competitions — not actual orders. In a framework with eight suppliers, any individual supplier might win anywhere from 5% to 40% of the total volume depending on their competitiveness in each mini-competition. Some framework suppliers report winning fewer than 10% of mini-competitions. Before investing heavily in a framework bid, assess the likely competitive dynamics: how many suppliers will be on the framework, what are the mini-competition criteria, and what is your realistic win rate. Build your business case on conservative volume assumptions, not the total framework value.
Frequently Asked Questions
What is the maximum duration of a framework agreement?
Section 42 of the Procurement Act sets a general maximum of four years, including any option periods. This limit applies to the framework agreement itself, not to individual contracts awarded under it — a contract awarded near the end of the framework period may extend beyond the framework's expiry. Longer framework durations are permitted only in exceptional cases where the subject matter genuinely requires it. The European Court of Justice and Finnish Market Court have accepted longer durations for procurements requiring significant capital investment (e.g., specialized equipment or infrastructure) where the investment cannot be recovered within four years. The authority must document the justification for exceeding four years. In practice, most Finnish framework agreements run for two years plus two one-year options, totaling four years.
What is a mini-competition within a framework agreement?
A mini-competition is a simplified competitive process conducted among the suppliers within a multi-supplier framework agreement, governed by Section 44 of the Procurement Act. The contracting authority sends a request to all framework suppliers describing the specific need, and suppliers submit offers within a reasonable deadline. The authority evaluates these offers using criteria that must be defined in the framework agreement — they cannot introduce entirely new criteria. Mini-competitions are faster than full procurement procedures because suitability requirements have already been verified during the framework establishment phase. Typical mini-competition timelines range from 5-15 working days. The process must still respect equal treatment and transparency principles. The authority must invite all framework suppliers to each mini-competition — it cannot selectively invite only some.
Can new suppliers join an existing framework agreement?
No. Once a framework agreement is concluded, no new suppliers can be added during its validity period. All suppliers must be selected through the original procurement procedure. This is a fundamental characteristic of framework agreements and one of their key limitations. If the market changes significantly during the framework period — for example, a new supplier enters the market with a superior solution — neither the authority nor the new supplier can modify the framework to include them. This limitation is one reason why framework agreements are capped at four years. For procurement categories where market conditions change rapidly, a dynamic purchasing system (DPS) may be more appropriate, as it remains permanently open to new qualified suppliers throughout its duration.
Related Terms
Open Procedure
Learn how the open procedure works in Finnish public procurement. Any supplier can submit a tender without pre-qualification under hankintalaki 1397/2016.
Dynamic Purchasing System
Learn about the dynamic purchasing system (DPS) in Finnish public procurement. An open system where new suppliers can join throughout its duration.
Contract Period
Learn about contract periods in Finnish public procurement. How sopimuskausi duration, options, and extensions work under procurement law.
Hansel
Learn about Hansel Ltd, Finland's central purchasing body for government procurement. How joint procurement and framework agreements work.
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