On 31st October 2019, the European Commission set out the new minimum financial thresholds for contracts caught by the application of EU Public Procurement Law.
These new thresholds apply from the 1st January 2020 and will remain fixed for the next two years. As the UK currently remains a member of the EU, the new thresholds have been published in their corresponding value in Sterling as well as Euros and will apply to contracts caught by Public Procurement Law in the UK.
The Public Contract Regulations 2015, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016 regulate the procurement activities of ‘contracting authorities’ and ‘utilities’ in England and Wales. ‘Utilities’ include ports, airports and energy providers while ‘contracting authorities’ including governmental bodies, councils and other public bodies such as universities and registered providers for social housing. The regulations implement their corresponding EU Directives on Public Procurement Law.
Every two years, the European Commission updates the minimum financial thresholds to which the EU Directives, and therefore the regulations, apply. Where contracting authorities or utilities procure contracts for goods, works or services which are of a value that exceeds the minimum financial thresholds, the full regime of the regulations apply. Such procurements are often known as “OJEU Procurement” because of the need to advertise the requirement in the Official Journal of the European Union (OJEU).
For the first time in a long time, the European Commission has actually decreased the minimum financial thresholds and the same are measured in Euros. The European Commission has prepared a document setting out the corresponding values to thresholds in the national currencies of each non-euro-zone member states. Due to the weaker position of Sterling against the Euro vis a vis the last time the financial thresholds were set at the end of 2017, the impact in the UK is that despite the decrease in the thresholds in Euros, the Sterling thresholds have actually increased.
Set out below are the new Sterling financial thresholds which will apply from 1st January 2020. The new rates are set out in bold texts whereas the current (ie, pre-2020) threshold rates are set out in brackets.
Public Contracts Regulations 2015
Central Government Bodies:
- Supplies – £122,976 (£118,133)
- Services – £122, 976 (£118,133)
- Works – £4,733,252 (£4,551,413)
Other Contracting Authorities:
- Supplies - £189,330 (£181,302)
- Services - £189,330 (£181,302)
- Works - £4,733,252 (£4,551,413)
The threshold for Light Touch (Social and Similar Services) remains the same in Euros but will increase in the UK to £663,540 (previously £615,278).
Utilities Contract Regulations 2016 (UCR 2016)
All Sectors:
- Supplies - £378,660 (£363,424)
- Services - £378,660 (£363,424)
- Works - £4,733,252 (£4,551,413)
Light Touch (Social and Similar Services) procured under these regulations has increased to £884,720 (previously £820,370). Again there has been no increase at EU level but the change in the exchange rate has increased the amount in Sterling.
Concession Contracts Regulations 2016
The threshold for concession contracts has increased to £4,733,252 up from £4,551,413.
The latest decision on thresholds may not be good news for practitioners in the euro-zone countries, however, in the UK the increase is good news for domestic contracting authorities and utilities. This is especially so, given that earlier in this decade the relevant strength of Sterling against the Euro had actually led to decreases in domestic minimal financial thresholds. In effect, this is righting the balance after those previous decreases. It should be noted, however, that due to the ongoing uncertainty regarding Brexit, it is unclear whether the UK will be included in official conversions and future changes to the minimum thresholds by the European Commission or whether the proposed legislation previously issued by the UK Government to set its own thresholds post-Brexit would see greater or smaller changes in the thresholds and the euro-zone equivalent.
For more information on public procurement issues, please contact Michael Winder on 0151 600 305 or by email to michael.winder@brabners.com or speak to a member of our Public Procurement Team.
