The Scottish Ministers have recently revised the public procurement thresholds for Scotland to ensure they are in line with the World Trade Organisation's Government Procurement Agreement (GPA). The updated thresholds apply to procurement exercises which commence on or after 1st January 2024, and will remain applicable until 31st December 2025.
As with the last threshold revisions made for 2022 to 2023, where VAT may be payable under a contract, purchasers must ensure that an allowance for VAT is included within the estimated value of the contract when determining whether the value of a contract is above or below the new threshold values.
The Scottish Government suggest that unless purchasers can demonstrate that a lower (or no) rate of VAT applies to a contract, they should add the standard rate of VAT (20%) to the net contract estimate, to avoid any potential undervaluing. Where VAT is initially payable but later recoverable it must still be included in the calculation of the estimated value of the contract.
The new thresholds apply to procurement exercises conducted under the Public Contracts (Scotland) Regulations 2015, the Concession Contracts Regulations (Scotland) 2016, and the Utilities Contracts Regulations (Scotland) 2016. However, in practice, Registered Social Landlords (RSLs) primarily tend to procure contracts under the Public Contracts (Scotland) Regulations 2015 (the 2015 Regulations). The new threshold values particularly relevant to procurement exercises undertaken by RSLs under the 2015 Regulations from 1st January 2024 are:
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Supply, Services and Design Contracts |
Works Contracts |
Social and other Specific Services
|
|
|
New threshold (including VAT) |
£214,904 Indicative value exc 20% VAT £179,087 |
£5,372,609 Indicative value exc 20% VAT £4,477,174 |
£663,540 Indicative value exc 20& VAT £552,950 |
Details of all changes to the procurement thresholds can be found here.
The Procurement Reform (Scotland) Act 2014
The updated thresholds above will not affect the thresholds in the Procurement Reform (Scotland) Act 2014 (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.
