Public Contracts Regulations 2015 currently apply in England, Wales and Northern Ireland – these regulations state that any public procurement activities over a given value must be advertised in the European Union’s Official Journal (OJEU). This value is estimated based on the total amount payable, excluding VAT, but including any potential options or renewals as specified in the procurement documents. New financial thresholds have been confirmed by the European Commission which apply to public procurement from the 1st January 2016 until the end of 2017. These thresholds apply to all EU member states regardless of whether they have introduced the European legislation or not, including Scotland.

We’ve summarised the new threshold values in the table below, with the outdated thresholds in brackets.

  Supply, services and
design contracts		 Works contracts Social and other
specific services
         
Public Central Government £106,047 (£111,676) £4,104,394 (£4,322,012) £589,148 (N/A)
Other contracting authorities £164,176 (£172,514) £4,104,394 (£4,322,012) £589,148 (N/A)
Small lots £62,842 (£66,672) £785,530 (£833,400) N/A
     
Utility authorities £328,352 (£345,028) £4,104,394 (£4,322,012) £785,530 (N/A)
       
Defence and security authorities £328,352 (£345,028) £4,104,394 (£4,322,012) £785,530 (N/A)
       

Although the threshold values have risen when calculated in Euros, conversion rates actually result in a reduction in threshold value when the contract value is estimated in Sterling. European procurement directives must be designed to comply with the World Trade Organisation’s (WTO) Government Procurement Agreement (GPA). The GPA defines these financial thresholds in a specialised type of asset established by the International Monetary Fund (IMF) known as Special Drawing Rights (SDR), rather than in Euros. The value of the SDR varies over time and is dependent on the relative values of a number of major global currencies including the Euro and Sterling.

This means that UK contracts valued close to the threshold level are much more likely to require publication in the OJEU when calculated in Sterling, so both suppliers and buyers in the UK can expect more competition from European organisations. Your organisation needs to be aware of these changes and the possible impact they may have on your future procurement strategy.