The Procurement Glossary » Framework Agreement

Framework Agreement

Sourcing & RFx

Also known as: Call-off Agreement

Definition

An umbrella agreement setting pre-negotiated prices and terms with one or more suppliers, from which individual orders are placed as needed.

Explanation

A framework (or 'call-off' agreement) removes the need to negotiate each purchase: terms are agreed once, then buyers place orders against them. It speeds up buying, locks in negotiated pricing and reduces maverick spend for recurring categories.

Example

A framework agreement with two office-supplies vendors lets any department order at agreed rates without a fresh RFQ.

Related terms

• Call-Off Order — An individual order placed against a pre-agreed framework or blanket agreement, drawing down on its agreed prices and terms.
• Blanket Purchase Order — A single purchase order covering repeated deliveries of goods or services over a period, at agreed prices, released as needed.
• Preferred Supplier — A supplier a business has chosen to favour for a category, usually because of negotiated pricing, reliability or a framework agreement.
• Contract — A legally binding agreement between buyer and supplier setting out what will be supplied, at what price and on what terms.

Frequently Asked Questions

What is Framework Agreement?

An umbrella agreement setting pre-negotiated prices and terms with one or more suppliers, from which individual orders are placed as needed. A framework (or 'call-off' agreement) removes the need to negotiate each purchase: terms are agreed once, then buyers place orders against them. It speeds up buying, locks in negotiated pricing and reduces maverick spend for recurring categories.

Can you give an example of Framework Agreement?

A framework agreement with two office-supplies vendors lets any department order at agreed rates without a fresh RFQ.

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