New Public Procurement Thresholds

Earlier this month the Government laid the Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (SI 2021/1221) (“Regulations”) before Parliament. The Regulations will come into force on 1 January 2022 and will only apply to procurements commenced after that date.

The Regulations update the financial thresholds for the application of the Public Contracts Regulations 2015 (“PCR”). “Contracting Authorities” (which include government departments, NHS Trusts, Local Authorities and Registered Providers) must advertise and competitively tender contracts with a value in excess of the relevant threshold in accordance with the procedures set out in the PCR.

The key change to note is that the applicable thresholds are now inclusive of VAT whereas they were previously net of VAT. Contracting Authorities will therefore need to carefully consider the way in which they calculate contract value after 1 January 2022. The effect of the change is that the applicable thresholds are increased for contracts where VAT does not apply but are, in comparative terms, lowered in respect of contracts where VAT will apply.

The applicable threshold for services subject to the “Light Touch Regime” (being health, social, care, catering, legal and security services) is unchanged in terms of numeric value. However, the threshold is now inclusive of VAT.

The table below sets out the current and new thresholds:

For more information, please contact Kris Kelliher.

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