Framework Agreement

A framework agreement is an arrangement between one or more contracting authorities and one or more companies that establishes the terms for a series of future individual contracts within a defined period – in particular prices, quantities and the scope of services. The key advantage: once the framework is in place, individual contracts (known as call-offs) can be placed without running a full procurement procedure each time.

Framework agreement or Rahmenvereinbarung?

In German procurement terminology the precise term is Rahmenvereinbarung. This is exactly the wording used by the GWB and the VgV. The colloquial "Rahmenvertrag" (framework contract) refers to practically the same instrument in public procurement. The important legal nuance: unlike a classic supply contract, a framework agreement does not create an immediate obligation to purchase a specific quantity – it creates the binding framework from which concrete contracts are subsequently awarded.

Distinction from a dynamic purchasing system

The framework agreement must be distinguished from related procurement forms. A dynamic purchasing system – unlike a framework agreement – remains open to new bidders at any time during its term and is organised fully electronically. A framework agreement, by contrast, is "closed" after award: only the selected contract partners can be served.

One or several contract partners

There are two basic types:

• Single-supplier framework: Individual orders are placed directly with the one contract partner. The terms are already fixed; the call-off requires no further procedure. Where gaps exist, the authority may request the supplier to complete its offer in text form under § 21(3) VgV.
• Multi-supplier framework: Several bidders become contract partners in the same procedure. Call-offs are made either on objective terms set in advance or through a renewed competition among framework partners (colloquially a mini-competition).

Maximum quantity and maximum value

A requirement of central practical importance concerns quantity and value limits. Following CJEU case law, authorities must state in the contract notice not only an estimated quantity or value but also a binding maximum quantity and/or maximum value. Once that ceiling is exhausted, the framework agreement ceases to have effect – further call-offs are then no longer permitted.

For companies, framework agreements are attractive because they offer predictable revenue over several years and a long-term business relationship with the authority. Those who systematically search for such frameworks can use Patterno-HIT to filter, across more than 180 procurement platforms, exactly the tenders where framework agreements match their own service profile.

The framework agreement is firmly anchored in both EU and national law.

EU legal basis. Article 33 of the EU Procurement Directive 2014/24/EU governs the framework agreement as a permissible public procurement instrument. The Directive notably fixes the general maximum term of four years and prohibits abusive use that would distort competition.

Legal definition in the GWB. At national level, § 103(5) GWB defines the framework agreement as an arrangement between one or more contracting authorities and one or more companies establishing the terms for contracts to be awarded during a given period – in particular regarding price. The award of the framework agreement itself follows the same rules as the award of corresponding public contracts.

Procedural rules in the VgV. The central procedural provision for supplies and services is § 21 VgV. It governs in particular:

• Maximum term: Under § 21(6) VgV the term may not exceed four years unless a special case justified by the subject matter of the framework agreement applies.
• Single-supplier framework (§ 21(3) VgV): Contracts are awarded within the established terms; where needed, the authority may ask the partner to complete the offer in text form.
• Multi-supplier framework (§ 21(4) VgV): Individual contracts may be awarded directly without renewed competition (where all terms are fixed), partly directly and partly through renewed competition, or fully through renewed competition.
• Renewed competition (§ 21(5) VgV): Invitation of the capable partners in text form, an adequate submission deadline, confidential treatment of offers and award to the most economically advantageous tender based on the published criteria.

For construction works, the parallel rule is found in § 4a EU VOB/A; see also the VOB/A.

CJEU case law on maximum quantity. In its judgment of 17 June 2021 in Case C-23/20 ("Simonsen & Weel"), the Court of Justice of the European Union ruled that contracting authorities must state in the contract notice both the estimated and the maximum quantity or value of the services to be provided. Once the maximum quantity is reached, the framework agreement is "exhausted" and no longer has effect. The maximum quantity must be objectively justifiable – unrealistically high values are not permitted.

Threshold calculation. What is decisive for the choice of procedure is the estimated contract value over the entire term. Under § 3 VgV, for framework agreements the total value of all individual contracts planned over the term must be estimated, including any extension options. If this exceeds the EU threshold, the framework agreement must be tendered EU-wide. For material contract modifications during the term, the limits of § 132 GWB apply.

A municipal hospital association tenders a four-year framework agreement for medical consumables with an estimated volume of EUR 6 million across the EU. Because the contract value over the entire term clearly exceeds the EU threshold for supply contracts, the VgV applies.

Procedure design. The association opts for a multi-supplier framework with three suppliers to ensure security of supply. The framework itself is awarded through the open procedure. In the contract notice, the association states an estimated annual quantity and – in line with CJEU case law – a binding maximum quantity for the entire term.

Process:

1. Contract notice. The contract notice is published on TED. It includes the estimated quantity, the maximum quantity, the term (four years) and the award criteria.
2. Tender evaluation. After the deadline, offers are evaluated; the three most economically advantageous bidders are awarded and become framework partners.
3. Call-off via renewed competition. For each specific order – such as a larger batch of surgical supplies – the association invites all three partners to submit offers in text form under § 21(5) VgV. The call-off goes to the most economically advantageous offer.
4. Monitoring the maximum quantity. The association continuously tracks the quantities called off. If the maximum quantity is exhausted before the end of the term, a new tender is required.

A similar picture emerges in pharma procurement: statutory health insurers' drug discount agreements are functionally framework agreements and – where above the threshold – are tendered under the rules of the GWB. A mid-sized supplier using Patterno-HIT for market monitoring receives such framework notices on the day of publication in its daily briefing, without having to search TED and regional platforms manually.

Framework agreements are regarded as an efficient procurement instrument – but in practice typical mistakes lead to challenges and review proceedings:

• Missing maximum quantity or value. The most common error after the Simonsen & Weel ruling: if the contract notice does not state a binding maximum quantity or value, the framework agreement is open to challenge. A mere estimated quantity is not sufficient.
• Incorrect threshold calculation. For framework agreements the total value over the entire term must be estimated under § 3 VgV – not just the annual volume. Under-estimating risks running the whole procedure unlawfully below the threshold.
• Exceeding the four-year limit without justification. A term beyond four years is only permitted in a special case justified by the subject matter (§ 21(6) VgV). Blanket justifications or mere convenience do not suffice.
• Material change of terms at call-off. Call-offs must stay within the originally established terms. Introducing new, material performance or price parameters at call-off constitutes an inadmissible contract modification under § 132 GWB.
• Confusion with the dynamic purchasing system. Anyone wishing to admit new bidders during the term needs a dynamic purchasing system – a framework agreement is closed to new partners after award.
• Assuming a purchase guarantee. A framework agreement generally does not oblige the authority to purchase a specific quantity. Bidders who base their pricing on the estimated quantity bear the volume risk.

For legally robust and commercially successful framework agreements, the following recommendations have proven effective – for both contracting authorities and bidders:

• Set the maximum quantity realistically and transparently. Authorities should objectively justify and document the maximum quantity or value. Values set too low force premature re-tendering; unrealistically high values are unlawful.
• Define the call-off mechanism clearly. Whether direct call-off on fixed terms or renewed competition – the method must be clearly described with objective criteria in the tender documents. Discretion exercised after the fact is not permitted.
• Consider a multi-supplier model for security of supply. Where supply reliability is critical (such as in healthcare), a multi-supplier model with renewed competition can be sensible – it combines competition with redundancy.
• Estimate the total value cleanly over the term. The estimation of the contract value must capture all individual contracts including extension options. This determines the correct choice of procedure and the available legal protection.
• Plan for lot division. Splitting the framework agreement into lots improves the chances of small and medium-sized enterprises and reflects the SME-promotion principle.
• Early market monitoring for bidders. Framework agreements typically run for four years – missing an award means being locked out for a long time. Systematic, AI-supported market monitoring across all relevant procurement platforms ensures no suitable framework agreement is overlooked.
• Keep a complete award record. The type of procedure, the determination of the maximum quantity and any justification for exceeding the four-year limit belong in the award record – the central line of defence in the event of a dispute.