On 20 December 2022, whilst everyone else was planning for Christmas, the UK government made the Public Contracts (Amendment) Regulations 2022 for the purpose of amending Part 4 of the Public Contracts Regulations 2015 (the “Regulations”).
These Regulations came into force on 21 December 2022 and increase the thresholds in respect of contracts that would otherwise not be regulated by the main provisions in the Regulations because their value is below the main financial thresholds in Regulation 5. Part 4 of the Regulations places some limited requirements on those contracts with a value above the Part 4 thresholds (see below) but whose value is lower than the main financial thresholds that above which the main provisions of the Regulations apply. The Part 4 requirements include some limited requirements around advertising, single stage procurements and a requirement to pay suppliers within 30 days of verifying an invoice.
The new financial thresholds for such contracts, which have applied since 21 December 2022 are set out be
- For central government contracting authorities a procurement value of £12,000; and
- For sub-central contracting authorities or an NHS trust, a procurement value of £30,000.
The previous thresholds were £10,000 and £25,000 respectively.
Although the new thresholds appear to have increased, the amendments made by the Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations made all values inclusive of VAT, rather than being net of VAT (as they were previously). Our article which discussed these amendments can be found here.
When the 2021 Regulations came into force the thresholds for Part 4 of the Public Contracts Regulations were not increased, which effectively lowered the threshold values and resulted in an increase in contracts that were above the threshold under Part 4 and an increased burden for in-scope contracting authorities.
The latest amendments to Part 4 are consistent with the previous amendments to the main financial thresholds.
The amendments will no doubt be welcomed by in-scope contracting authorities given that this should reduce the burden on them, however they must still consider whether a contract is subject to VAT before calculating whether the contract is above or below the threshold and it will be crucial that they monitor both any further changes to thresholds and any changes to the rate of VAT. It should also be noted that the new thresholds do nothing to reflect inflation.
For more information on public procurement issues, please contact Michael Winder or speak to a member of our Public Procurement Team.
