New year, new public procurement thresholds

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New year, new public procurement thresholds

Published 24 November 2021

New public procurement thresholds will apply from 1 January 2022 and contracting authorities will find that even more of their procurements will be caught by the full rigour of the public procurement procedures. The thresholds for calculation purposes will now be inclusive of VAT and therefore will be proportionately lower than previously.

As a result of an earlier change to the regulations that came into force on 16 August 2021, the lower threshold under public procurement regulations will also now apply to NHS Trusts as they are no longer considered to be “sub-central contracting authorities”. Rather, they will be classified as “central government authorities”.

Changes to public procurement thresholds will come into force on 1 January 2022 by virtue of The Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (the Regulations).

The Regulations affect the Public Contracts Regulations 2015 (PCR 2015), the Concession Contract Regulations 2016 (CCR 2016), the Utilities Contracts Regulations 2016 (UCR 2016) and the Defence and Security Public Contracts Regulations 2011 (DSPCR 2011). These changes will apply to all procurements started after that date.

The changes have been made to conform with the UK’s agreement with the World Trade Organisation on Government Procurement. Significantly, the thresholds are now inclusive of VAT. The relevant figures are set out below.

PCR 2015 Contract type

Current threshold (net of VAT)

New threshold (including VAT)

Public works contracts

£4,733,252

£5,336,937

Public service and supply awarded by central government authorities, and their design contests

£122,976

£138,760

Public service and supply awarded by sub-central contracting authorities, and their design contests

£189,330

£213,477

CCR 2016 Contract type

Current threshold (net of VAT)

New threshold (including VAT)

Concession Contract (Works or Services)

£4,733,252.00

£5,336,937.00

UCR 2016 Contract type

Current threshold (net of VAT)

New threshold (including VAT)

Supply and Services Contracts and Design Contests

£378,660.00

£426,955.00

The thresholds for contracts covered by PCR 2015’s “light touch regime” for services haven’t changed and nor have they for works contracts and supply and services contracts under the DSPCR 2011, but the figures are now VAT inclusive.

For contracts with estimated values above the relevant threshold, contracting authorities will have to publish notices on the Government’s “Find a Tender” service and run a procurement in compliance with the relevant regulations.

Contracts that fall below the financial thresholds are not caught by the main regulations of the PCR 2015, though will still be subject to Regulation 110 PCR 2015 relating to below threshold contracts.

The below threshold regulations apply unchanged, requiring contracting authorities to advertise contracts on Contracts Finder that are over stated thresholds, these being:

  • £10,000 (central government)
  • £25,000 (sub-central authorities)

These new thresholds will be of particular interest to contracting authorities in the health sector, by virtue of The Public Procurement (Agreement on Government Procurement) (Amendment) (No. 2) Regulations 2021, which came into force on 16 August 2021. Schedule 1 to this regulation specifies a list of NHS entities as central government authorities, such as the NHS Business Services Authority, NHS Commissioning Board (known as “NHS England”) and most importantly, all NHS Trusts and NHS Foundation Trusts.

This means that the lower threshold under PCR 2015 will apply to contracting authorities in the health sector, potentially catching more of their procurements, and they will not be able to enjoy the relative freedoms formerly available to them as sub-central contracting authorities. For example, where the contract is awarded by restricted procedure or competitive procedure with negotiation, sub-central contracting authorities can make the call for competition by means of a prior information notice under Regulation 26(9) PCR 2015.

Do get in touch with any member of our procurement team below for further information or assistance. 

Authors

Katherine Calder

Katherine Calder

Newcastle

+44 (0)191 404 4060

Emily Broad

Emily Broad

London - Walbrook

+44 (0) 20 7894 6029

Phoebe Baxter

Phoebe Baxter

London - Walbrook

+44 (0) 20 7894 6354

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