Revised Public Procurement Thresholds January 2022

The Cabinet Office has presented The Public Procurement (Agreement on Government Procurement)(Thresholds)(Amendment) Regulations 2021 to parliament and these provide for new thresholds for public procurement commenced on or after 1st January 2022. These supersede the previous thresholds established whilst the UK was part of the EU.

In a change to the previous regulations these new thresholds include VAT in the calculation of contract value.

Contracts with a total attainable value above the thresholds must be advertised on the Government’s 'Find a Tender' website and the procurement must to undertaken in line with the full arrangements within the Public Contract Regulations 2015 (PCR2015).

For housing associations and local government procurers the key thresholds are:

Public Works	£5,336,937
Public Services	£213,477
Public Supply	£213,477

In a change to the previous regulations these new thresholds include VAT in the calculation of contract value. The keen eyed will notice that the threshold for contracts incurring VAT have actually reduced once the VAT has been taken into account.

There is no change to the threshold figures for small lots (PRC 2015 - S6 (14)-(15)) and these remain at £884,720 and £70,778 for works and services/supplies respectively but the calculation again now includes VAT.

There is also no change to the threshold for contracts that fall below the full PRC2015 requirements but must still be advertised on Contract Finder. This remains at £25,000, but again, this now includes VAT where applicable.

As mentioned previously in these updates, you need to consider the total ascertainable value of the contract being procured and so a three year contract with an option to extend for two further years, with an annual value of £42,694 (inc VAT) or more will need to be procured as an above threshold contract. This will be a contract for £35,578 +VAT per year. As usual, you are not permitted to divide up a procurement to avoid the regulations (other than using the small lots arrangement for legitimate reasons).

For procurements started before 1st January 2022 the old thresholds and arrangement shall be applicable but take careful note of what ‘having started' actually means (see S7 for the full definition here)

This article should not be relied on as a statement of law and readers are advised to take their own legal advice in the matters discussed.