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New Public Procurement Thresholds 2022/2023

New Public Procurement Thresholds 2022/2023

As of the 1st January 2022, the public procurement thresholds have changed in Scotland.

These thresholds were previously set at an EU level. However, as a result of the UK leaving the European Union, the Scottish government must now revise the threshold values of the procurement regulations every two years to ensure that they are aligned with the thresholds set out in the World Trade Organisation’s Government Procurement Agreement (“GPA”).

One key difference under the rules of the GPA is that the procurement thresholds must now include VAT. Under the previous EU rules, the procurement thresholds were exclusive of VAT.

Wherever VAT may be payable under a contract, contracting authorities must ensure that the calculation of the estimated value of the contract includes an allowance for VAT.  

Unless purchasers are able to demonstrate that a lower (or no) rate of VAT applies to a contract, the recommendation is to add the standard rate of VAT (currently 20%) to the net contract estimate to avoid any potential undervaluing.

The new thresholds apply to procurement exercises conducted under the Public Contracts (Scotland) Regulations 2015, the Concession Contracts Regulations (Scotland) 2016, the Utilities Contracts Regulations (Scotland) 2016 and the Defence and Security Public Contracts Regulations 2011.

However, RSLs will tend to primarily procure contracts under the Public Contracts (Scotland) Regulations 2015 (the “2015 Regulations”). The new threshold values relevant to procurement exercises carried out under the 2015 Regulations which commence on, or after, 1 January 2022 are:

 

Supply, Services and Design Contracts

Works Contracts

Social and other Specific Services

 

New threshold (including VAT)

£213,477

Indicative value exc 20% VAT £177,897

£5,336,937

Indicative value exc 20% VAT £4,447,447

£663,540

Indicative value exc 20& VAT £552,950

 

Details of all the changes to the procurement thresholds can be found here

Procurement Reform (Scotland) Act 2014

The updated thresholds above will not affect the rules implemented by the Procurement Reform (Scotland) 2014 Act (“the 2014 Act”). The 2014 Act provides that any contracts over £50,000 (for goods and services) or £2 million (for works) must be advertised on the Public Contracts Scotland website. An award notice must also be published on the website when an RSL awards a contract with a value that exceeds the thresholds set out in the 2014 Act. These thresholds remain exclusive of VAT.

If you would like to find out more about the new public procurement thresholds please contact a member of our team .

Written by : Mark Oswald