Public and utilities procurement thresholds are set to rise in the new year
Published on 1st Dec 2021
The revised value thresholds that trigger the application of public and utilities procurement regulations will now include VAT
From 1 January 2022, new public and utilities procurement thresholds will come into force. These changes will be brought into effect by the Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2021 (SI 2021/1221).
The regulations update certain financial thresholds in the Defence and Security Public Contracts Regulations 2011 (SI 2011/1848), Public Contracts Regulations 2015 (SI 2015/102) (PCR 2015), Concession Contracts Regulations 2016 (SI 2016/273) and the Utilities Contracts Regulations 2016 (SI 2016/274). These amendments do not affect any procurements that commence before the regulations come into force.
One of the key changes is that the new thresholds now include VAT rather than being net of VAT. The amendments to the thresholds are as follows:
Public Contract Regulations 2015
| Contract type | Current threshold (net of VAT) | New threshold (including VAT) |
| Public works contract | £4,733,252 | £5,336,937 |
| Public supply contracts and public service contracts awarded by central government authorities, and their design contests. | £122,976 | £138,760 |
| Public supply contracts and public service contracts awarded by sub-central contracting authorities, and their design contests. | £189,330 | £213,477 |
Utilities Contracts Regulations 2016
| Contract type | Current threshold (net of VAT) | New threshold (including VAT) |
| Public works contract | £4,733,252 | £5,336,937 |
| Public supply and services contracts and design contests | £378,660 | £426,955 |
Concession Contracts Regulations 2016
| Contract type | Current threshold (net of VAT) | New threshold (including VAT) |
| Concession contract | £4,733,252 | £5,336,937 |
Osborne Clarke comment
The threshold figures determine whether contracts are subject to the procurement regulations.
This VAT change means that there has in real terms been a reduction in value of the threshold figures. In order to meet their legal obligations, contracting authorities procurement teams will need to ensure they take account of VAT when calculating the value of their contracts from 1 January 2022.
The government expects to provide further guidance by publishing a Procurement Policy Note in due course.
