Framework agreements: bidding when the volume is not fixed

What a framework agreement is

• TermUsually at most 4 yearsLonger only with good reason. In the utilities sectors the maximum is 8 years.
• PartiesOne or moreWith one supplier, orders usually go to you directly. With several, they are sometimes compared again, under rules fixed in advance.
• PurchasesNo guaranteeA framework agreement does not automatically oblige the buyer to purchase. Only if that is agreed.

An estimated and a maximum quantity

In 2021 the Court of Justice of the European Union ruled in Simonsen & Weel that a buyer must state the estimated quantity or value of a framework agreement and a maximum. Once the maximum is reached, the framework agreement has no further effect. The maximum applies to all participating buyers together.

That helps you judge what you are getting into. But the maximum is not a promise: the buyer does not have to reach it. A maximum tells you about the top, not about what you will certainly get.

Pricing when the volume is uncertain

Normally a larger volume justifies a sharper rate. Your fixed costs are spread over more work, and you can plan and buy more efficiently. But if you do not know whether that volume will come, the question is which volume to price for.

1. 1Ask for a minimum volumeAsk in the clarification round. A minimum gives you a floor to price on, and other bidders read the answer too.
2. 2If there is none, assess the riskWork out your price at a low, an expected and a high volume. What do you earn in each scenario, and what loss can you carry if it turns out low?
3. 3Watch what is fixedCosts you incur regardless of volume, such as start-up, systems or fixed staffing, do not belong in a rate that only works at high volume.
4. 4Look at the termFour years with indexation is different from four years of fixed prices. Work it out with the indexation calculator.

A sharp rate that only works at a volume that never comes is not a sharp rate, but a gamble.

If it goes beyond the maximum

Once the maximum is reached, the contract may only be extended in a limited way. Dutch law allows a non-substantial change: up to 10% of the value for services and supplies or 15% for works, below the threshold; or up to 50% in unforeseen circumstances or where it is necessary. Beyond that the buyer must in principle tender again. So do not count on work above the maximum.