Regarding the execution of the framework procurement agreement
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As the owner of an integrated large-scale project, when purchasing various equipment, instruments, and materials, framework procurement agreements are generally used. But what are the advantages of adopting such framework procurement? When all technical requirements are met, the most critical factor is price – how can manufacturers submit quotes and compare them? Because the specific purchase list has not been released yet. Please share your experiences and practices.
Large-scale projects don’t necessarily require a framework; once the design institute provides the technical specifications, bidding can be carried out based on those specifications. Companies like Sinopec and CNPC need to purchase large quantities of equipment every year, have numerous subsidiaries, and undertake many construction projects each year. To avoid the situation where each project requires a separate bidding process and each subsidiary acts independently, and to simplify the equipment procurement process, framework bidding is adopted. Depending on the volume of purchases, it is further divided into the headquarters framework and the branch office framework. When formulating the framework, the parameter specifications of the equipment are determined based on the procurement plans of various subsidiaries over previous years; for example, several common specifications are chosen for Hikvision cameras – 3 types for dome cameras and 5 types for bullet cameras. The rest is just like a normal bidding process; the price factor depends on the quote for each individual device. In framework bidding, multiple companies can win the contract, but each will hold a different share; for example, in the case of cameras, Hikvision accounts for 70% while Dahua accounts for 30%.
In large integrated projects, multiple units are not ordered and purchased at the same time; if purchases are made directly, a technical agreement and price negotiation must be conducted for each unit. If a framework agreement is used, the technical agreement and price can be negotiated once; for the other devices, it is sufficient to sign technical agreement contracts and commercial contracts directly, which reduces the workload. Furthermore, a framework agreement can prevent suppliers from raising prices in the event of changes or increased purchases. Spare parts required throughout the project’s operation can also be purchased at the price specified in the framework agreement.