The Scottish Government has now published its analysis of responses to the recent consultation on amending the thresholds to the Procurement Reform (Scotland) Act 2014 (“2014 Act”). The consultation analysis gives an indication of the direction of travel for procurement reform in Scotland.
Background
Thresholds under the 2014 Act determine when a procurement becomes “regulated”, triggering statutory requirements around advertising, transparency and procedural compliance. At present, those thresholds sit at £2 million for works contracts and £50,000 for other contracts (such as goods and services) and have remained unchanged since 2014.
Over time, inflation has significantly eroded these figures. This has effectively expanded the scope of regulated procurement over time, bringing a greater volume of lower-value contracts within the 2014 Act’s regime.
Against that backdrop, the consultation sought views on whether the thresholds should be increased, and notably, whether the community benefit threshold (currently set at £4 million) should be reduced.
Key Consultation Analysis Findings
The consultation analysis indicates broad stakeholder support for reform, particularly in relation to increasing financial thresholds. The option most commonly selected by respondents was a more substantial one-off uplift of £4 million for works and £100,000 for other contracts with no provision for amendments every two years to reflect inflation (option 3). However, a high number of respondents also favoured an inflation-linked uplift (option 2), which would raise thresholds to £2.8 million for works and £70,000 for other contracts, with these thresholds being revised every two years to reflect inflation.
This feedback indicates that stakeholders recognise the administrative burden associated with regulated procurements and consider that current thresholds capture too many low-value contracts.
Community Benefits
As noted above, the current obligation to consider community benefit requirements applies for contracts with an estimated value equal to or greater than £4 million.
The consultation explored reducing this threshold, potentially as low as £1 million, to extend the reach of community benefit requirements. Responses suggest a degree of support for lowering the threshold, particularly from those focused on community wealth building.
However, concerns were also raised around proportionality and deliverability. Respondents highlighted that community benefit requirements must remain meaningful and achievable, and that imposing them on lower-value contracts could place financial burdens on suppliers/contractors, as well as administrative burdens on contracting authorities.
Conclusion
Whilst the consultation analysis does not itself change the law; it provides a strong indication of future policy direction. Contracting authorities should anticipate regulatory amendments in due course and consider how changes to thresholds may affect procurement strategies and compliance obligations.
We have an experienced team that are able to advise on all issues relating to public procurement. Please contact our team here if you would like more information or advice.
