The UK government has published new legislation which updates the minimum financial thresholds for public procurement. The revised thresholds will take effect from 1 January 2024 and contracting authorities will need to observe these changes going into the new year. Procurements commenced prior to 1 January 2024 will be subject to the current thresholds.
The legislation introduces increased thresholds with respect to public, concessions and utilities contracts, as follows:
|
Category
|
Type of Contract
|
Current Threshold until 31 December 2023 (inclusive of VAT)
|
New Threshold from 1 January 2024 (inclusive of VAT)
|
|
Public (Public Contracts Regulations 2015)
|
Works
|
£5,336,937
|
£5,372,609
|
|
Services and Supplies (central government authorities)
|
£138,760
|
£139,688
|
|
|
Services and Supplies (sub-central contracting authorities)
|
£213,477
|
£214,904
|
|
|
Concessions (Concession Contracts Regulations 2016)
|
Concession contracts
|
£5,336,937
|
£5,372,609
|
|
Utilities (Utilities Contracts Regulations 2016)
|
Works
|
£5,336,937
|
£5,372,609
|
|
Services and Supplies
|
£426,955
|
£429,809
|
A contract with a value exceeding the applicable threshold will fall within the scope of the UK public procurement regime and must follow regulated tender processes.
It would appear that the government is continuing to review public procurement thresholds every 2 years in line with the UK’s obligations under the World Trade Organisation Agreement on Government Procurement. Contracting authorities can therefore expect these updated thresholds to remain in place for 2 years, before being revised further.
As is the new UK practice, it is worth noting that the procurement thresholds are quoted as inclusive of VAT. This is in contrast to the pre-Brexit position whereby thresholds were calculated net of VAT. Contracting authorities must be sure to include the relevant rate of VAT into their calculations when assessing whether their contract falls within the thresholds. Although the financial value of the thresholds has increased since Brexit, the inclusion of VAT into the calculation has, in effect, reduced the thresholds, such that more contracts are now likely to fall within the scope of the procurement regime.