General Procurement

Public Procurement thresholds 2018/2019 – updated

New Public Procurement thresholds 2018/2019

2020/2021 Public Procurement Thresholds Update Available here *

Public Procurement thresholds 2018/2019 – updated

With the ongoing uncertainty over whether or not Brexit negotiations will result in an agreement, changes to public procurement remain a distinct possibility (see our blog on the UK Government’s contingency for e-procurement in the event of a “no-deal” scenario).

Despite this, it is important to remember that the regulatory framework for public contracts will remain in place in the UK for the foreseeable future regardless of the outcome. EU Public Contract Regulations were passed into UK law in 2015 and will remain in place unless or until they are repealed and replaced.

Considering the time frames involved in formulating and ratifying new legislation, the thresholds detailed below will almost certainly remain in effect until the end of 2019 regardless of the outcome of the negotiations.


When procuring goods or services over the financial threshold a public authority must do so under the Public Contracts Regulations 2015 in England, Wales and Northern Ireland and the Public Contracts (Scotland) Regulations 2015. These regulations transposed the European public contracts directive (2014/24/EU) into national law.

The main point of interest from our readers’ perspectives is that buying organisations must advertise any requirement over the new thresholds in the Official Journal of the European Union (OJEU), rather than just advertising it nationally. The calculation of the estimated value of a procurement shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.

Between the 2016/2017 thresholds and the 2017/2018 thresholds we have seen a small increase in the thresholds in both Pounds Sterling and Euros. Due to the relatively small increase it is unlikely that buyers or suppliers will notice much change in the size of contracts advertised at European level.

 

Public Contracts

Supply, Services[1] and Design Contracts
Works Contracts[2]
Social and other specific services[3]
Central Government[4]
£118,133

€144,000

£4,551,413

€5,548,000

£615,278

€750,000

Other Contracting Authorities
£181,302

€221,000

£4,551,413

€5,548,000

£615,278

€750,000

Small Lots
£65,630

€80,000

£820,370

€1,000,000

n/a
[1] With the exception of the following services which have different thresholds or are exempt:
– Social and other specific services (subject to the light touch regime) Article 74.
– Subsidised services contracts specified under Article 13.
– Research and development services under Article 14 (specified CPV codes are exempt).
[2] With the exception of subsidised works contracts specified under Article 13.
[3] As per Article 74. Services are listed in Annex XIV.
[4] Schedule 1 of the Public Contracts Regulations lists the Central Government Bodies subject to the WTO GPA. These    thresholds will also apply to any successor bodies.

 

Social and other specific services are subject to the ‘light touch regime’ as described in a previous blog.

 

Utility Contracts

Supply, Services and Design Contracts Works Contracts Social and other specific services
Utility Authorities £363,424

€443,000

£4,551,413

€5,548,000

£820,370

€1,000,000

Defence and Security Contracts

Supply, Services and Design Contracts Works Contracts Social and other specific services
Defence and Security authorities

 

£363,424

€443,000

£4,551,413

€5,548,000

n/a

 

Clarifications

Concession Contracts

For the first time Concession Contracts are covered in EU Law under a separate directive and therefore separate regulations in the UK.

The EU Directive is found here:

http://eur-lex.europa.eu/legal-content/GA/TXT/?uri=celex:32014L0023

The UK regulations here:

http://www.legislation.gov.uk/uksi/2016/273/contents/made

The UK Directive outlines how the value of a concession contract should be calculated:

http://www.legislation.gov.uk/uksi/2016/273/regulation/9/made

The thresholds for publication in the OJEU refers to Article 8 (1) of the EU Directive which is:

  1. This Directive shall apply to concessions the value of which is equal to or greater than EUR 5 548 000.

The Sterling equivalent is £4,551,413

Calculating Estimated Value

The calculation of the estimated value of a procurement exercise shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.

Contracts Subsidised by Public Funds

All applicable contracts which are subsidised by 50% or more of public funds must be advertised in the OJEU. From time to time a public body may part fund a project and request that the recipient of funding must advertise the procurement in line with public contracts regulations even if their contribution is less than 50% of the overall value. As such any recipient of public funding on a project should verify with the funding body what is expected of them in procuring for the project.

What are Small Lots?

Read our blog about small lots.

How do I Know if a Contract is Classed as Works?

Many contractual requirements are a mixture of works and services. Whichever element is the highest in value should be taken as the contract nature when determining what threshold to apply. If you are unsure whether a specific element is classed as works or services then you can refer to Schedule 2 of the regulations which lists all activities which constitute works by CPV code:

http://www.legislation.gov.uk/uksi/2015/102/schedule/2/made

If the CPV code which fits your requirement is not in that list then it is not classed as a Works contract.

 

Tenders Direct can alert you to suitable public contracts as soon as they’re published. Visit our website or call us on 0800 222 9009 to learn more.

 

12 replies »

  1. With the de-regulation of the water industry allowing contracting authorities to tender their water usage will this also fall under the procurement regs? I ask on the basis that no EU country will have interest or capability to bid for such services?

    • Hi Simon,

      Contracts for water supply post-deregulation are still subject to the applicable procurement regulations, so assuming they are above the relevant threshold they still need to published in the Official Journal of the European Union. Your point is valid of course – it does seem that an exemption may have been appropriate given the lack of interest / capability outside of the UK! Let us know if you have any other queries.

      John

      • HI John

        I have a question I need expert opinion on regards OJEU tendering and control of supplier selection. My dilemma is this: I am looking to re-tender our agency provision, whilst the actual pricing will be measured within the tender as rates charged per hour etc, the fact of the matter is that a shift to a new vendor will cost significant amounts of money (new booking software portal installation and end user training for example) What this means is that unless there is a saving of at least £40-£50k to be had, then the costs of moving vendor on the basis of a slightly reduced hourly rate will far exceed any small savings made. Not to mention the business risk in doing so.
        My question is, how can it be incorporated within the scoring mechanism to reflect the fact that here needs to be significant savings without making it obvious to the current incumbent that there is room for manoeuvre for them regards price.

        I hope this is understandable, if I cannot find a solution then we may end up awarding to a new vendor based on price etc but will be faced with a substantial internal cost and risk to make the move.

        Hoping you may have a suggestion?

        Many thanks and very best regards

        Simon Bullimore

      • Hi Simon,

        Thanks for your query. This type of situation isn’t uncommon for buyers – as you say, a lower quote from another supplier does not necessarily result in overall savings when the transition from an incumbent incurs additional costs.

        Obviously it is at your discretion to shape the scoring criteria, so you can reflect your concerns about implementation costs in the costing proposal if you so choose as long as you’re able and willing to provide justification in line with the applicable regulations.

        On the flipside, promoting healthy competition – and being seen to – is of course vital, and its conceivable that other suppliers could see such a move as an attempt at gerrymandering in favour of the incumbent (even if your genuine priority is simply to achieve the most economically advantageous tender).

        Unfortunately we can’t give you any direct advice on what route to take on this one, but we’re of the opinion that this issue perhaps needs to be addressed in procurement regulations in more detail so as to balance free and fair competition with the imperative for buyers to achieve value for money. As you say, its quite a dilemma!

        John

      • Hi John

        Is there any official guidance what so ever regards whether UK Public Sector organisations will still have to advertise on OJEU after March 29th?

        Also, the same question regards whether we will have to procure goods and services under the rules of the Procurement Regulations 2015.

        Your advice and comments very much welcomed as always.

        Best regards

        Simon Bullimore

      • Hi Simon,

        Yes the Cabinet Office has released guidance covering both deal and no-deal scenarios: https://bit.ly/2SIRrJi . The upshot is that if that the proposed UK/EU deal is finally agreed then the current OJEU process will continue to apply, but if not the government has a contingency to introduce a UK version of the OJEU. As the 2015 regulations are passed into UK law they will continue to apply until such time as they are repealed / replaced. It all of course depends on how the political drama pans out!

        Kind Regards,

        John

    • Hi Michael,

      Assuming you fall into the category of ‘Other Contracting Authorities’ then yes this is the correct threshold. The threshold refers to the total contract value so you may have 3 or 4 roles combined that meet the threshold in one contract or a single role that meets the threshold in one contract – it depends how much the spend per annum is for the contract and how many years it runs for (the threshold is for the total value so a 4 year contract with an annual value of £50k = £200k so is above threshold).

      You may also wish to read our previous blog on the aggregation rules as you are required under the Public Contracts Regulations 2015 to combine similar contracts into one – this measure was clarified in the 2015 regulations to avoid contracts being split up to keep them below threshold – so if you do have several roles you need to combine them into one contract:

      https://blog.tendersdirect.co.uk/2015/11/23/the-2015-regulations-on-the-aggregation-of-contracts-and-the-use-of-lots/

      Hope that is of help,

      Gemma

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s