What is a dynamic market? How they work in the public sector

The Procurement Act 2023 has created a new form of commercial agreement called dynamic markets. These agreements provide new flexibilities and opportunities to public sector buyers.

This article breaks down what a dynamic market is, how it benefits you as a buyer and how it differs from other forms of agreements.

What is a dynamic market and how do they work?

Dynamic markets are essentially a list of qualified suppliers who can provide a particular range of products or services.

A dynamic market remains open to new suppliers joining or leaving the list at any time across the market’s lifetime. There is no limit on the number of suppliers that can join a dynamic market.

In a dynamic market, you can access suppliers that have been assessed to have the legal, financial and technical ability to fulfil public sector contracts. You can then run competitions across the full range of suppliers, with contracts awarded using the competitive flexible procedure (CFP).

This is different to how suppliers are awarded on to open frameworks or closed frameworks, where the list of awarded suppliers stays unchanged for the agreement’s lifespan or is only updated at certain limited times.

What benefits do dynamic markets offer to public sector buyers?

Dynamic markets offer several advantages to public sector buyers:

• an open supplier list: encourages innovation and allows the supplier base to keep pace with rapidly-evolving markets
• suppliers only need to meet the conditions of membership to participate in a dynamic market: making it easier for you to access harder-to-reach suppliers such as start-ups and providers of niche services
• increased competition through a wider range of suppliers bidding for opportunities: creates even greater value
• running contract awards as a competition ensures all capable suppliers are considered for every call-off: allowing you to consider  innovative approaches and achieve better outcomes

How are dynamic markets different from Dynamic Purchasing Systems?

Under the Procurement Act 2023, dynamic markets are a replacement for Dynamic Purchasing Systems (DPSs).

The main difference between dynamic markets and DPSs, is that DPSs were limited under the previous regulations to only providing commonly purchased products.

In comparison, dynamic markets can be set up for procurement of all kinds of goods, services or works. However there are still some limited exceptions, which are outlined in the Cabinet Office guidance on dynamic markets.

Procurements carried out under a dynamic market must also meet the minimum contract value threshold for each type of contract.

When is a dynamic market used?

As with all framework providers, CCS considers the best style of agreement to meet the requirements of each market. Therefore, a dynamic market is used if it is assessed as suitable for that market. This include assessing:

• the stability of the market
• how much the supplier base is likely to change over time
• how much innovation could be seen in the products and services on offer

For example, it may be preferable to use a framework style of agreement in situations where the pool of suppliers is relatively fixed, or if the agreement is likely to require the option to award without further competition. 

We will continue to decide what style of agreement to use based on which will provide the best value to you as a buyer. We consider maximising financial savings, flexibility and access to innovation. 

Other articles related to the Procurement Act 2023

• what are open frameworks?
• what does the National Procurement Policy Statement mean?

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