This page contains information on thresholds set by the central government for public procurement.
Resource
What are thresholds?
Contract thresholds refer to a set of predefined monetary limits and fixed criteria that dictate how and whether public sector contracting authorities must publish various procurement notices.
Contract thresholds have existed in the UK for decades but have been brought into sharp new focus with the introduction of the 2023 Procurement Act, which aims to increase transparency in public procurement.
Below-threshold contracts are subject to fewer obligations than above-threshold contracts.
For below-threshold procurements, tender notices and contract details notices are typically the only compulsory publications – and even these may not apply for very low value procurements below a specific limit.
The majority of the provisions in the Procurement Act 2023 (Act) only apply to a public contract. A contract is only a public contract where it is not exempted and has an estimated value (including VAT) of not less than the threshold amounts set out in Schedule 1. These thresholds are therefore critical in ensuring that contracting authorities understand when they need to comply with the standard provisions in the Act.
What is the legal framework that governs thresholds?
- The applicable thresholds are set out in Schedule 1 and can be grouped into three main categories:
- Those aligned to international agreements;
- Defence and security contracts; and
- Light touch contracts.
- The thresholds in the Act have since been updated to align with the UK’s international obligations on public procurement. The revised thresholds were set out in Procurement Policy Note 11/23 and are replicated below.
Key points and policy intent
International agreements
- The UK has a duty to give access to its public procurement markets to suppliers from states which it has a relevant trade agreement with. These trade agreements are listed in Schedule 9 of the Act.
- The UK’s thresholds in its relevant trade agreements either align with or are higher than the thresholds in the UK schedules to the WTO Government Procurement Agreement (GPA). Accordingly, the UK remains compliant with its international obligations by aligning relevant thresholds in the Act to the UK GPA thresholds.
- The UK GPA thresholds are in Special Drawing Rights (SDRs). Every two years, the UK is obliged to provide the GPA with the sterling equivalent of its SDR thresholds. The revised threshold then takes effect from 1 January of every even year. This is to adjust for currency fluctuations.
- To ensure the Act remains aligned to the sterling UK GPA thresholds, Schedule 1 contains a power for an appropriate authority (a Minister of the Crown, the Welsh Ministers or a Northern Ireland department) to update relevant thresholds in the Act by statutory instrument. A Procurement Policy Note is issued every two years to confirm the new sterling thresholds.
- The thresholds listed in rows 4, 6 and 9 to 12 in Schedule 1, paragraph 1(1) correspond to the UK GPA sterling thresholds for the period 1 January 2022 to 31 December 2023. These thresholds were in place when the Act received Royal Assent on 26 October 2023. These thresholds will be updated when the Act comes into force to remain aligned with the GPA thresholds which were updated on 1 January 2024. For reference the updated thresholds are set out in the table below:
|
Type of contract |
Thresholds (including VAT): 1 January 2024 to 31 December 2025 |
|
Utility works contract |
£5,372,609 |
|
Utility contract that is not a works contract, a defence and security contract or a light touch contract |
£429,809 |
|
Concession works and services contract |
£5,372,609 |
|
Works contract |
£5,372,609 |
|
Contract for the supply of goods or services (which may be mixed contracts that contain some works elements) to a central government authority not within any other row |
£139,688 |
|
Contract for the supply of goods or services (which may be mixed contracts that contain some works elements) to a sub-central government authority not within any other row |
£214,904 |
Light touch contracts
- Schedule 1 provides a power to update the thresholds for light touch contracts. These thresholds are not determined by the GPA and as such are not subject to change every two years.
- Schedule 1 does, however, allow the light touch contracts’ thresholds to be updated for different purposes, for example to allow for inflation or reflect changing priorities for this category of contract.
- Where a light touch contract is also a concession contract, the higher threshold used for concession contracts This threshold continues to align with the UK GPA threshold for construction services which is SDR 5,000,000 (currently £5,372,609) and is updated every two years.
|
Type of contract |
Threshold (including VAT) |
|
Light touch utilities contract |
£884,720 |
|
Light touch concession contract |
£5,372,609 (1 January 2024 to 31 December 2025) |
|
All other light touch contracts |
£663,540 |
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