What is a Dynamic Purchasing System?

What is a Dynamic Purchasing System and how do they compare to a traditional framework agreement?

A Dynamic Purchasing System (DPS) in simple terms, is similar to a framework with two exceptions:

• Suppliers can join at any time
• Procurement processes have to be run completely electronically

On the face of it seems like a good thing, right? Certainly many public sector buying organisations (PSBO)s are creating DPS systems for their members to use. Whilst there are categories of spend where a DPS could be the most appropriate route to market, there are trade-offs for you to take into account.

The Regulations governing DPS’ require you to invite all the suppliers on the DPS to tender for your contract. All suppliers who pass the DPS’ selection criteria are awarded a place on the DPS and this can result in a DPS having many suppliers admitted to it. The unlimited number of suppliers on a DPS could result in you receiving a high number of tenders compared to your contract size and scope. All tenders will need to be evaluated against the published award criteria resulting in many hours of work for the evaluation team/individual.

When a category of spend has no shortage of suppliers and your evaluation criteria is comprehensive (in order to ensure you appoint the right contractor), a framework agreement might be the more suitable route to market. Outsourced cleaning services are a good example where a framework agreement would provide you with a known number of suppliers. The manageable quantity of suppliers will allow for a competition ensuring the efforts of your evaluation team are spent evaluating suppliers who will have been through a more robust process in getting onto a framework than those simply appointed to a DPS.

When a DPS is created by a PSBO they will generally have only evaluated the suppliers against selection criteria as defined in The Public Contracts Regulations. Selection criteria is focussed on a supplier’s economic stability and technical capability of performing the contract but does not generally assess whether they offer value for money.

Whereas, when a framework agreement is established, the PSBO will usually have completed a full evaluation of the suppliers against award criteria designed to ensure suppliers on the framework are capable of offering the most economically advantageous tender using a combination of price and quality criteria. Using a framework allows you to focus your efforts on suppliers that have already proved to offer value for money in their marketplace as opposed to having to evaluate offers from suppliers who may not.

DPS systems have their place and there are categories and products for which a DPS would be perfect. Markets where there is a fast pace of change, commodities with a high volume of transactions or are less complex in scope, can greatly benefit. However, if you have a complex goods or services such as outsourced cleaning and catering services you might decide the benefits of a traditional framework agreement make these a more appropriate procurement vehicle due to the extra vetting which has been undertaken by the PSBO on the suppliers listed.