Framework Contracts and Infrastructure Procurement

Framework Contracts and Infrastructure Procurement (FCIP) is a chief directorate within Infrastructure Development Management System (IDMS) branch. The chief directorate’s duties are to establish framework contracts, to ensure that the infrastructure is procured and delivered in a suitable manner. Framework contracts is one of the infrastructure procurement strategies endorsed in IDMS.

A framework contract is a form of contract that has broader scope of services and goods to be procured. It is established through the normal Supply Chain Management (SCM) bidding process. The service providers that have been appointed through this process are called Framework Contractors. The framework contract (agreement) has zero Rand value and are for a period of 3 years from the date a framework agreement is sgined. The Rand value is realised when the municipality has a need to use the framework contract and issue a task order with the framework contractor. MISA in collaboration with municipalities have identified key infrastructure goods and services that are required the most by municipalities and established a few framework contracts. A municipality identifies projects that need service for, develops the scope and confirm budget availability. The municipality identify the suitable framework contract for its project and follow the Supply Chain Management’s Regulation 32 of the Municipal Finance Management Act (MFMA). In an event where public entities want to use MISA framework contracts, they need to follow section 16A6.6 of the Public Finance Management Act (PFMA). Municipalities have two options to follow when appointing a service provider:

  • 1st option – is to choose one service provider from the list provided and write a submission stating reasons why they chose that specific service provider. The submission should be approved by the Accounting Officer in the Municipality which is Municipal Manager.
  • 2nd option – is to send the scope of work to all the service providers on the list and request pricing proposal, evaluate all the proposals and appoint based on the price proposals received.

Appointment through framework contracts is not capped to contract amount, and a framework contractor can be appointed for more than once by various municipalities and more than one municipality at a time (ie. one framework contractor can have more than one task order at a time provided one has capacity to provide the goods and services).

The advantages of having  framework contracts is that the procurement period becomes shortened therefore ensuring a speedy service delivery. If used appropriately can help reduce the high levels of irregular expenditures in municipalities, which is as a result of non-compliance in the SCM processes; and as well help municipalities to realize the economies of scale through buying in bulk and negotiation therefore be able to negotiate lower rates.