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There are four types of contracts that
public sector bodies award to the private
sector. Some of these are short-term
contracts and others can be much
longer-term.
What this means is that the way the public
sector acquires products and services splits
down into two distinct types of method
buying and purchasing. Although to
everyone else they mean the same thing, in
the public sector the difference is massive
and very important. |
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Framework
contracts means business over a
fixed period of time. It doesn't
commit the public sector body to
buying a specific amount from
you, but they will generally
give you an estimate on their
needs.
Framework contracts often have
the following features in common
-
Start date and finish date
An agreement to buy certain
products or services from you
and you exclusively between
those two
dates. As you'd expect, the
products and services are
exactly specified
Agreed terms and prices over
the period
They are awarded to
preferred/approved suppliers
(this means you'll have to get
on this list prior to
being awarded a framework
contract)
Although not exclusively,
framework contracts tend to
involve intellectual services,
such as consultancy, IT,
software, environmental
consultancy and so on |
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Measured-term
contracts are fixed-period too -
they allow a public sector body
to buy a defined amount of goods
and services from your company.
Measured-term contracts tend to
have the following features...
The contract stipulates a set
amount of work (normally in the
form of work orders) for your
company
within a defined area
You produce a schedule of
rates for the public sector body
and the work you do for them is
measured and valued against
those rates. Discounts are
received according to the amount
of work
and this helps public sector
bodies assess the likely cost
over the period.
They will be for between two
and five years
Measured-term contracts most
generally cover maintenance work
but occasionally do cover minor
building works and improvements. |
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Often covering
areas such as stationery, a
call-off contact is used when a
specific quantity of goods and
services are required over a
given time period. Major
considerations for public sector
bodies in these types of
contracts are the prices, terms
& conditions and specifications.
Call-off contracts are
generally...
legally binding and provide a
lot of protection for your
company
delivery can be made to a
schedule, but more often than
not, separate "call-off" orders
will be
placed against the contract,
eventually running it down to
zero
offers much more certainty for
businesses than framework
contracts |
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Fixed-price
contracts are types of
agreements when the price for
the provision of goods and
services is fixed prior to the
beginning of the agreement and
from which there can be no
movement in either direction by
your company.
If you over-estimate your
costs of delivering what you
have promised, you will make
more than you
originally envisaged.
Alternatively, if you have to
carry out more work than
believed, this can either
reduce your profit margin or
turn the contract into a loss
for your company
You are at your most
vulnerable financially with this
type of agreement
You may lose the chance to
gain a fixed-price contract if
the public sector body does not
believe
there is sufficient margin in
the deal to make it worthwhile
for you. |
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A spot contract is essentially a purchase
order from a public sector body to your
company. It covers a specific and defined
off-one purchase for products or services.
It is generally used for high value or
complex contracts requiring the use of
tendering. |
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