What are the new procurement thresholds?
The New Year brings new procurement threshold updates! As of the 1st of January 2022, schools and MATs are subject to new procurement ‘thresholds’. You might need to update your internal policies to reflect this new legislation.
The procurement thresholds dictate which sections of the Public Contracts Regulations 2015 you are bound by, determined every time you have a new purchase. If your purchase meets or exceeds the threshold, then your tender must be structured to follow the processes set out within the Regulations.
If your purchase falls below these procurement thresholds, you are still bound to by the Regulations, but there are less stringent rules to follow. The updated thresholds are as follows:
Area | Previous threshold Excl. of VAT | New (Jan 22) threshold Now Incl. of VAT |
Works contracts | £4,733,252 | £5,336,938 |
Goods and services contracts | £189,330 | £213,477 |
Please note – as stated within the table above – that the new procurement thresholds now include VAT. This means that you are unlikely to benefit from the increased threshold value and, in certain cases after factoring in VAT, the value will be lower than it would have been previously.
It will therefore be essential to calculate the full value of the purchase before formally tendering/awarding.
Remember that these figures relate to your contract’s lifetime value! (If you have a rolling contract, take the value over the previous 4 years into account.)
These changes follow on from a year of important talks and updates regarding the future of public procurement within the UK. With the Queen highlighting it in her speech last year, to multiple Cabinet Office updates showcasing more post-Brexit changes, public procurement in the UK is adapting from a very different version of itself that existed years prior.
How can you prepare for the new procurement thresholds?
It is very important that you review your internal policies to comply with the new law, or risk inadvertently breaching it. In times of sweeping change such as this, it is vital to manage your contracts effectively so that they remain compliant. Remember the five key points to consider when tendering:
- Treat every bidder equally, in a transparent way.
- Do not unfairly disadvantage any bidders.
- Keep a record of the process.
- Allow sufficient and reasonable time, as directed.
- Be clear with your requirements and how you will assess these.
We also have a quick guide covering the do’s and don’ts of contract management that can give you the reminder you may need to ensure compliance.
These new thresholds are a starting point regarding these upcoming changes mentioned in the links above and if you are unsure of the rules applicable to your school/MAT, seek advice from experts. If you would like our assistance with this process, contact us and our procurement specialists will be on hand to help you through any query you may have.
