Procurement terminology: what are ‘small’ lots?
Posted by Line Olsen on January 6, 2017
In public procurement, lots, and in particular ‘small lots’ are often an area of much confusion. What is a small lot and what does the small lot threshold mean?
Hopefully this SMALL blog entry will answer a LOT of your questions.
In short, a small lot is a contract, or part of a contract, that is exempt from the public procurement rules. You have to consider a few things first, before you exclude a contract from procurement procedures and publication in the OJEU. Below is an example of a list of lots that may appear in a construction related contract notice:
- Lot 1 – Architectural Services
- Lot 2 – Civil Engineering Consultancy
- Lot 3 – Mechanical Consultant
- Lot 4 – Quantity Surveyor
For each procurement opportunity, you must first consider if the contract is a stand-alone, or part of a group of similar contracts.
If the contract is stand-alone, it must follow the procurement procedures and be published in the OJEU if the total value of the contract is estimated to be above the Central Government or other contracting authorities thresholds for supplies, services or works. Read more about the thresholds for 2016/17 in a previous blog post.
If the contract is part of a group of similar contracts, the value of those contracts must be combined: this is known as aggregation of contracts and is further covered in this blog post about aggregation and lots. If the aggregated value is above the Central Government or other contracting authorities thresholds for supplies, services or works, then all the similar contracts must follow the procurement procedures and be published in the OJEU.
Now we come to the small lots and how you can exclude a contract from the procurement procedures and publication. The provision for this is found in regulation 6(14)(15)PCR2015. This provision allows a buyer to award contracts without applying the rules under two conditions:
- The value of the lot must be below the small lot threshold
- The value of the lot cannot exceed 20% of the aggregated value of the combined contracts
So why does this rule exist? I believe one of the reasons is to encourage buyers to split contracts into smaller lots, and further encourage them to award contracts to SMEs. I have covered this subject in this blog about SME access by splitting contracts into lots.
Are you still confused? Leave a comment or get in touch with Millstream’s Training and Consultancy team.