Updated thresholds for public procurements to be applied from 1 January 2022

The financial thresholds for the application of the Public Contracts Regulations 2015 will change from 1 January 2022. The Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (SI 2021/1221) set out the position.

On the face of it the threshold amounts will be increased, but the estimated value of procurements will now be inclusive of VAT instead of net of VAT. This means that contracting authorities will need to consider if the requirement is subject to VAT, and if so, at what level, before knowing what the threshold is.

The Light Touch Regime threshold will not of itself be amended. However, the Light Touch Regime threshold will now also become inclusive of VAT.

The new thresholds that will apply from 1 January 2022 are as follows:

It is important to remember that, as from 16 August 2021, NHS England and NHS Foundation Trusts fall within the definition of Central Government Authorities.

Contracting Authorities will need to exercise great care when calculating the estimated value of procurements when the new thresholds come into place, given the added complication of considering VAT, to ensure they are not caught out by this amendment.

The Regulations’ transitional provisions confirm that these changes do not affect any procurements commenced before 1 January 2022.

Hempsons’ specialist procurement team can advise you on the issues raised within this article, or any other procurement issues.