Call-off Contracts 101
We're often asked about various procurement terms, especially if suppliers are new to the public sector market. Call-off contracts are a common hurdle!
What is a call-off contract?
Put simply, a call-off contract is an individual contract between a supplier and buyer for the provision of services or goods.
Call-off contracts come into play when there is a procurement transaction via a Framework Agreement. Previously, all public sector procurement was carried out via tenders. These days the majority of public sector procurement transactions take place through frameworks. As a side note, a framework is effectively a list of pre-qualified suppliers who can bid for work with public sector bodies!
A purchaser on a framework can request that a supplier provide goods and/or services under prices, conditions and terms specified in each individual call-off contract. They are typically used for the purchase of materials, facilitating bulk orders over a period of time.
In theory, all call-offs have to be published on Contracts Finder – in practice, that’s not always the case.
Why are call-off contracts used?
The structure of a framework allows buyers to award individual contracts to chosen suppliers. When a supplier is listed on a framework and a buyer wishes to work with them, they may enter a call-off stage.
The benefit of a call-off contract is that they allow the supply of materials, goods and services to be secured over multiple delivery dates across the length of a project. Hence, a buyer does not have to hold excess stock unnecessarily on-site. Instead, they can “call off” stock when it is required. This generally facilitates the reduction of the risk of material loss and damage and allows buyers and suppliers to be more precise and organised. Staggering the delivery of materials can also help reduce the cost of preliminaries such as rent, fencing, storage costs and security.
The purpose of the call-off contract is to establish the quantities and frequency of delivery without the need for multiple purchase orders. The latter would require invoices to be raised as they are required until the contract is fulfilled, or the end of the order period is reached. The issue with this is the time taken for the buyer to put in more orders and the supplier to continuously raise invoices. This method can often incur delays in the buyer’s project if orders take longer than anticipated.
What is in a call-off contract?
A call-off contract will set out the terms and conditions for specific purchases on framework agreements. Purchasing organisations may set stringent and bespoke conditions for a framework. These conditions can then be modified as part of individual call-off contracts to be specific to that supplier-buyer partnership.
Call-off contracts will typically follow the below structure:
- Order form
- Call-off contract charges
- Terms and Conditions
- Collaboration agreement
- Alternative clauses
- Glossary and interpretations
- GDPR Information
When are call-off contracts settled?
The buyer will generally settle the call-off contracts with the supplier that has submitted either the lowest product prices or the most economically advantageous tender (MEAT).
A buyer may rank call off contracts on a range of factors including, but not limited to:
- Value for money
- Ability to meet timelines
- Approach to identifying and managing risk
- Equality, diversity, environmental and inclusion policies
Pricing is often pre-determined but can be negotiated to include discounts for bulk orders. However, recent public sector procurement has been focused on tenders with the most value for money. This brings us to the ‘most economically advantageous tender (MEAT). The buyer will more often than not award the contract to the MEAT within public sector procurement. This method brings a level playing field and allows the procurer to get the best value for money. The MEAT does not always mean the cheapest bid wins, the buyer is looking at more than just the price.
Our top 3 tips for completing a call-off contract
Even though the call-off contract is the final stage of the process, your deal with the buyer is not yet set in stone! You have the chance to kick-start the relationship on a positive note or risk losing the contract. We all know how important a good reputation is! Here are our top three tips:
Get familiar with how public sector procurement works and what the terminology is.
The call-off template holds information about the particular contract, such as:
- the total contract value
- how it’s going to be paid
- main contact details for both the supplier and buyer sides
- information on insurance, etc.
This sounds simple enough, but the call-off contract can be hard to understand for first-time suppliers. It contains quite a bit of public sector and legal jargon. As a supplier with inspiration to sell to the government, you need to know your buyer – how they think and talk. The last thing you want is to waste money and resources on getting to grips with the basics at this late stage.
Fill in the contract for your buyer.
The call-off contract comes in a form of a templated document that you fill in with your buyer, but we recommended filling it out for them instead. It’s good form to take that responsibility on and take the burden away from your customer. This isn’t easy though. You need to know the terms and the conditions of the framework very well. You don’t want it to be non-compliant. For example, an area of contention we’ve found is the length of the contract. Unsurprisingly often the time specified here by suppliers is longer than allowed.
Don’t try to amend the terms of the framework agreement during a call-off
Every framework has its own set of terms and conditions. When you applied for it you would have signed those terms in order to be accepted onto the framework. The call-offs are not an opportunity for you to re-negotiate these terms and conditions. Trying to change this at this stage will not be received kindly!
These are the basics of a call-off. It might not be an easy thing to understand at first and it can be tricky to complete, but it’s a good problem to have. It means you are just one step away from a sale! For our clients, we take that burden away and complete the call-off for them, or assist along the way.