What is a dynamic purchasing system in public procurement?

A dynamic purchasing system (DPS) is a fully electronic, open procurement route used by public sector organisations to purchase commonly used goods, works, or services from a pre-qualified pool of suppliers. Unlike a framework agreement, a DPS remains open throughout its lifetime, meaning new suppliers can apply to join at any point. This article unpacks how a DPS works in practice, who can use one, and when it makes more sense than running a full tender.

How does a dynamic purchasing system work in practice?

A dynamic purchasing system works in two stages: first, a contracting authority establishes the DPS by advertising it and pre-qualifying suppliers who meet the minimum selection criteria. Second, whenever the authority needs to make a purchase, it runs a mini-competition among all the suppliers admitted to the relevant category of the DPS. Every call-off contract is awarded through this second-stage competition rather than directly.

The entire process must be run electronically. Contracting authorities publish the DPS notice on Find a Tender (the UK’s official procurement portal), set out the selection criteria, and evaluate supplier applications. Suppliers who meet the criteria are admitted to the system and remain on it for the duration. There is no cap on the number of suppliers who can join, which is a fundamental difference from a closed framework.

When the authority is ready to buy, it issues a mini-competition to all suppliers within the relevant lot or category. Suppliers submit tenders, the authority evaluates them against pre-set award criteria, and the contract is awarded to the most economically advantageous tender. This two-stage structure keeps the process competitive and transparent while avoiding the administrative burden of running a full procurement exercise from scratch each time.

What types of goods and services suit a dynamic purchasing system?

A dynamic purchasing system is best suited to commonly used, well-defined goods, works, or services that a public sector organisation needs to procure repeatedly over time. Typical examples include temporary staffing, IT equipment, facilities management services, construction works, and professional services such as consultancy or training. The DPS format works well wherever the market is broad and the authority benefits from keeping supplier access open and competitive.

The format is particularly effective in markets where new suppliers regularly enter, where technology or pricing evolves quickly, or where the authority wants to avoid locking itself into a fixed supplier list. Because any compliant supplier can join at any time, the DPS prevents incumbent suppliers from gaining an entrenched advantage simply by virtue of being on the list first.

It is less well suited to highly bespoke, complex, or one-off requirements where the specification is unique and unlikely to be repeated. In those cases, a full open tender or a competitive procedure with negotiation may be more appropriate, since the DPS structure assumes a degree of standardisation in what is being bought.

What’s the difference between a DPS and a framework agreement?

The key difference between a dynamic purchasing system and a framework agreement is openness. A framework agreement is closed once established: only the suppliers admitted at the outset can win call-off contracts. A DPS, by contrast, remains permanently open to new supplier applications throughout its life. Any supplier that meets the selection criteria can join at any time, making it a more competitive and inclusive route to market.

There are several other important distinctions worth understanding side by side.

• Supplier access: Framework agreements fix the supplier list at the point of award. A DPS allows new entrants at any stage, which keeps competition alive and prevents market stagnation.
• Call-off process: Frameworks can allow direct awards to a single supplier (where the framework is with one supplier) or mini-competitions among framework members. A DPS always requires a mini-competition for every call-off: there are no direct awards.
• Duration: Framework agreements are generally capped at four years. A DPS has no statutory maximum duration under current UK procurement rules, though authorities should review whether it remains fit for purpose over time.
• Transparency: Both routes require publication on Find a Tender, but the DPS’s ongoing openness means the market remains visible and accessible to a wider range of suppliers, including smaller organisations that might not have been ready to apply when the original notice was published.

For public sector buyers, the choice between the two often comes down to how stable the supplier market is and how much the authority values ongoing competition versus administrative simplicity.

Who can join and use a dynamic purchasing system?

Any public sector contracting authority covered by the Procurement Act 2023 can establish or use a dynamic purchasing system. This includes central government departments, local authorities, NHS trusts, housing associations, universities, and other bodies subject to public procurement law. On the supplier side, any organisation that meets the published selection criteria can apply to join a DPS at any point during its lifetime: there is no closing date for supplier applications.

For suppliers, particularly small and medium-sized enterprises, the DPS can be an attractive route because it removes the barrier of a fixed application window. A smaller organisation that was not ready to apply when the DPS was first established can join later once it has built the necessary capacity or experience, provided it meets the criteria at the point of application.

Contracting authorities can also use a DPS established by a central purchasing body, such as Crown Commercial Service, rather than setting one up themselves. This is common in central government and increasingly in the wider public sector, where the administrative cost of establishing and managing a DPS in-house may not be justified for lower-volume purchasing categories.

What are the key rules governing a DPS under UK procurement law?

Under the Procurement Act 2023, which replaced the previous Public Contracts Regulations 2015 regime, a dynamic purchasing system must be run as a fully electronic process. The authority must publish a contract notice on Find a Tender to establish the DPS, set clear and proportionate selection criteria, and evaluate all supplier applications within a reasonable timeframe. Suppliers who meet the criteria must be admitted: the authority cannot cap the number of participants.

The rules also require that every individual contract awarded through a DPS is preceded by a mini-competition. The authority must invite all suppliers admitted to the relevant lot or category to participate, set out the award criteria in advance, and evaluate responses in a transparent and consistent way. Direct awards without competition are not permitted under the DPS route.

Additional obligations include keeping the DPS open for new supplier applications throughout its lifetime, notifying unsuccessful applicants of the reasons for rejection, and publishing contract award notices for individual call-offs above the relevant threshold. Authorities should also ensure that the selection criteria remain proportionate and do not act as an unnecessary barrier to smaller or newer suppliers entering the market.

It is worth noting that the Procurement Act 2023 introduced a new mechanism called a dynamic market, which builds on the DPS concept and offers greater flexibility. Organisations navigating these changes should ensure their procurement teams are up to date with the latest guidance from the Cabinet Office and the relevant sector-specific authorities.

Should public sector buyers use a DPS or run a full tender?

Public sector buyers should use a dynamic purchasing system when they need to make repeated purchases of standardised goods or services, want to keep the supplier market open and competitive, and can commit to running mini-competitions for each call-off. A full open tender is more appropriate for one-off, complex, or high-value requirements where the specification is unique, the market is narrow, or the authority needs to negotiate detailed contract terms before award.

The DPS offers clear advantages in the right context. It reduces the time and cost of running individual procurements from scratch, keeps the supplier pool fresh and competitive, and supports access for smaller suppliers who might otherwise be excluded from closed frameworks. Over time, it can also give the authority better market intelligence, since mini-competition responses reveal current pricing and capability across a broad supplier base.

However, a DPS requires upfront investment to establish correctly, including drafting robust selection criteria, setting up the electronic platform, and managing ongoing supplier applications. For organisations with limited procurement resource or a low volume of repeat purchases in a given category, the administrative overhead may outweigh the benefits, and a well-structured framework or a straightforward open tender may be the more pragmatic choice.

The decision should always be driven by the nature of the requirement, the structure of the supply market, and the organisation’s capacity to manage the chosen route compliantly and effectively.

How eXceeding helps with dynamic purchasing systems and public sector procurement

eXceeding works with public sector organisations across the UK to navigate complex procurement routes, including dynamic purchasing systems, framework agreements, and full tender processes. Whether you are establishing a DPS for the first time or need support running compliant mini-competitions, the eXceeding team brings the expertise to manage the process from end to end.

• Advising on the most appropriate procurement route for your specific requirement and supply market
• Designing and running compliant DPS processes, including supplier evaluation and mini-competition management
• Supporting organisations through the implications of the Procurement Act 2023 and the transition to new procurement models
• Providing interim procurement resource to fill skills or capacity gaps within your team when you need specialist expertise at pace
• Delivering end-to-end tender management for complex or high-value procurements where a full process is required

If your organisation is weighing up procurement routes or needs experienced support to run a compliant process, get in touch with eXceeding to discuss how we can help.

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