Procurement: updated thresholds for January 2022 published

The procurement thresholds for 2022 have been released. In contrast to previous years when the thresholds were determined by the European Commission, this year the UK government has set the thresholds via the Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (“the 2021 Regulations”) which were laid before Parliament on 1 November 2021.

The new procurement thresholds will apply from 1 January 2022 to all procurements commenced on or after that date.

At first sight these appear to be higher than the thresholds for 2020-2021, however there is an additional key change that means that the thresholds are in fact lower. That is that the 2021 Regulations provide that the value of a procurement must now be calculated inclusive of VAT. By way of example, a contract for services due to be awarded by a local authority (a sub-central authority) with a value net of VAT of £205,000 would be over the relevant threshold because once VAT was taken into account the total contract value would be £246,000. The effect of these changes will therefore be to bring more procurements within the scope of the fully regulated regime.

A short summary of the main thresholds is below, with the 2020-2021 thresholds shown in italic text by way of comparison:

*2020-2021 thresholds

There are also changes to the thresholds for Utilities, with the threshold for contracts for supplies and services changing from £378,660 to £426,995 and the threshold for works changing from £4,733,252 to £5,336,937.

There has been no change to the threshold for Light Touch Regime procurements. As highlighted in our previous article, NHS Foundation Trusts and NHS England have recently been confirmed as central authorities rather than sub-central authorities.

If you would like to discuss this topic in more detail, please contact Fran Mussellwhite, Partner.