Public procurement: new thresholds from 1 January 2022


04 November 2021

On 1 November the Minister for the Cabinet Office laid The Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (the Regulations) before Parliament.

These Regulations provide for revised financial thresholds for public procurements under 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.

Under the above sets of regulations, for contracts with estimated values above relevant thresholds, contracting authorities must publish notices on the Government’s Find a Tender service and run a fully compliant procurement under the appropriate regulations, e.g. PCR 2015. Therefore, it is important that contracting authorities are aware of the revised, increased thresholds when calculating the value of their contracts.

At present, the estimated value of the contract is calculated over the whole lifetime of the contract net of VAT, and includes any renewals or extensions and all the lots into which the contract is divided. Contracting authorities will be familiar with the prohibition in Regulation 6 (5) PCR 2015 of using a method to calculate the estimated value of a contract in order to reduce the value below the relevant threshold to exclude the contract from the PCR 2015.

Note a change under the Regulations, whereby the estimated value of procurements (under all the above-mentioned regulations) will be calculated on the total amount of the procurement inclusive of VAT rather than net of VAT.

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. This requires that such contract opportunities over certain thresholds are to be advertised on Contracts Finder. The current thresholds are:

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

These sub-threshold amounts as yet remain unchanged.

Looking first at the changes to the thresholds for the PCR 2015, these will be increased as follows:

  • Public works contracts increased from £4,733,252 to £5,336,937.
  • Public supply and services contracts awarded by sub-central contracting authorities, and their design contests increased from £189,330 to £213,477.
  • Public supply and services contracts awarded by central government authorities and their design contests increased from £122,976 to £138,760.

The threshold for the CCR 2016 has increased from £4,733,252 to £5,336,937 and the following changes to the UCR 2016 thresholds will be as follows:

  • Public supply and services contracts and design contests increased from £378,660 to £426,955.
  • Public works contracts increased from £4,733,252 to £5,336,937.

The Regulations, with the new thresholds, will come into force on 1 January 2022 and do not apply to procurements started before that date.

If you have any questions about how these thresholds will affect you, please call Siobhan Collis or another member of the Public Sector Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2021.

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