Public Procurement Thresholds – Important Changes for the New Year

20 December 2023

The UK Government has set out legislation providing for new minimum financial thresholds to apply to public procurement contracts as of 1 January 2024.

The Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2023 were published on 26 October 2023. They come into force on 1 January 2024 and will update the minimum financial thresholds for the Public Contracts Regulations 2015. From this point, any public contract above the new relevant threshold must be procured in line with public procurement law.

To put the changes into context, FFT’s specialist procurement team has provided the following advice.

For public works contracts, the new threshold is £5,372,609, having risen from £5,336,937.

For public supply and public services contracts for contracting authorities other than Central Government, the new threshold is £214,904, up from £213,477.

 The threshold for Light Touch (social and similar services) hasn’t changed and is set at £663,540.

As with the current thresholds, it is important to bear in mind that the new values will be inclusive of VAT. Contracting authorities must therefore consider whether their requirement is subject to VAT (and if so, at which rate) before ascertaining whether a particular requirement is above or below the threshold.

As well as the Public Contracts Regulations 2015, threshold changes have also been made under the Concession Contracts Regulations 2016, and the Utilities Contract Regulations 2016.

Contract definitions explained

A contract will be considered ‘public works’ if it is a new build, an extension, a roof replacement programme, or a programme of kitchen and bathroom replacements.

If the contract is for ground maintenance, gas servicing, cleaning, or the supply of fire doors (supply only, not supply and installation), then it will be considered a supplies or services contract.

The Procurement Act 2023

The Procurement Act 2023 received Royal Assent on 26 October 2023 and will come into effect from October 2024. Its final version of makes clear references to the existing (pre-January 2024) thresholds, notably in section 85 (regulated below-threshold contracts) and Schedule 1 (threshold amounts).

With this in mind, if the intention is to incorporate the new thresholds, then the Act will need to be updated. As a wider legislative framework is pending, it appears likely that any updates to reflect the new thresholds will come at the same time as the secondary legislation.

If you are looking for support on any public procurement matters, or have any questions about the new thresholds, you are welcome to contact our dedicated procurement consultancy team.