Value for below-threshold advertising requirements corrected for NHS Foundation Trusts

Published 5 January 2023

The Public Contracts (Amendment) Regulations 2022 (‘SI 2022/1390’) came into force on 21 December 2022.  This corrects anomalies relating to the inclusion of VAT in contract values, and the different treatment of NHS Foundation Trusts and NHS Trusts for below-threshold procurements that had arisen following the Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (‘SI 2021/1221’). 

Previously, the contract values set out in Reg. 109 of the Public Contracts Regulations 2015 (PCR) for below-threshold procurements that fell within scope of Chapter 8 PCR and could be required to be advertised on Contracts Finder (if advertised elsewhere - see our previous article for further information), had been stated in SI 2021/1221 to be inclusive of VAT, in the same way as the other procurement thresholds, effective from 1 January 2022.  This meant that although there was no change to the figures stated in Reg. 109(2)(b) and (c), i.e. £10,000 and £25,000, in reality the threshold values were reduced as these figures were now inclusive of VAT.  This resulted in an increased burden for contracting authorities as more contracts fell within scope of Chapter 8 PCR.

In addition, although both NHS Trusts and NHS Foundation Trusts are now (by virtue of the Public Procurement (Agreement on Government Procurement) (Amendment) (No. 2) Regulations 2021 (SI 2021/872)) included in Schedule 1 to the PCR and classified as “central government authorities”, NHS Trusts (but not NHS Foundation Trusts) benefited from the higher £25,000 threshold in Reg. 109(2)(c) which usually relates to sub-central authorities.  This, combined with the provisions of SI 2021/1221, meant that while the provisions of Chapter 8 applied to NHS Foundation Trusts’ procurements worth £10,000 incl. VAT or more, they only applied to NHS Trusts’ procurements worth £25,000 incl. VAT or more. 

The provisions of SI 2022/1390 correct the above inconsistencies so that:

1. The revised contract values relevant to Chapter 8 PCR continue to be inclusive of VAT but are revised upwards to effectively reinstate the previous net values:
   • 109(2)(b) is amended to read £12,000
   • 109(2)(c)(ii) is amended to read £30,000 
2.  NHS Foundation Trusts now also benefit from the higher threshold in Reg. 109(2)(c) as they are expressly referred to, along with NHS Trusts, in Reg(2)(c)(i).

This might still be considered by some to be confusing because Foundation Trusts and Trusts are considered to have central government obligations for above threshold procurements but sub-central obligations for below-threshold procurements. Nevertheless, it is likely to be welcomed by NHS bodies and in particular NHS Foundation Trusts, who are now on the same footing as NHS Trusts.

Please contact our procurement team below for further information or assistance.