Public Law

A guest post by Roger Cotton, partner in Brodies’ Projects team.

From 1 January 2014 new EU procurement thresholds will apply. This post summarises how they will change.

The surprise is that the thresholds applying in the UK have come down, albeit only marginally. This is not because the EU Commission has reduced them across the EU. In fact, expressed in Euros, the thresholds have gone up (on a very rough average by about 3.5%). But, due to the variations in the official Euro-GBP exchange rate used for procurement purposes since the thresholds last changed in 2012, the values in GBP will reduce.

The changes

 

Threshold GBP value 2012-2014 New GBP value from 2014
Central government threshold

The threshold for the full application of the rules for contracts for goods and services for central government contracting authorities.

£113,057 £111,676
General contracting authority threshold

The threshold for the full application of the rules for contracts for goods and services for contracting authorities other than central government.

£173,934 £172,514
Utilities threshold

The threshold for the full application of the rules for contracts for goods and services for utilities and defence/security contracts.

£347,868 £345,028
Works threshold

The threshold for the full application of the rules for contracts for works – applies to all sectors.

£4,348,350 £4,322,012
Small lots cap

The maximum value of a lot forming part of a larger requirement for goods or services which a buyer can carve out from the aggregation rule in valuing an overall requirement.

£69,574 £66,672
Works small lots cap

The maximum value of a lot forming part of a larger requirement for works which a buyer can carve out from the aggregation rule in valuing an overall requirement.

£869,670 £833,400

Does it matter?

Not much! Our view is always that – speaking generally – if your valuation is getting close to the OJEU limit then authorities should supplement the processes of advertisement and multiple quotes aimed at value for money with the additional steps which lead to OJEU compliance. That usually just makes sense in terms of the quantification and balancing of risk.

So, the fact that (to take an example) the local government services threshold has dropped by around £1500 is not going to lead to a significant change in procurement practice. But for a contract on the margins the changes bring into focus how robust valuation processes need to be and what happens if projections turn out to have been wrong when the bids come back. If you think you are under but are playing it safe, are you bound by the rules and remedies, bound only if you say you are, or always exempt? We can help with all these difficult questions.

What next?

No UK legislation is required to make these changes – the regulations implementing the EU directives do that automatically.

More significantly, the new procurement directives expected to come into force in early 2014 include (in the latest available text) a reference to all of the thresholds being reviewed.

The thresholds at EU level are tied to thresholds agreed on an international basis – by reference to the World Trade Organisation treaty on Governmental Procurement. The EU is a signatory to that treaty on behalf of its Member States, and the suggestion is that when that WTO treaty next comes under review, there may be an upward pressure on the thresholds which apply internationally, and by extension to the EU procurement rules.

Charles Livingstone

Partner at Brodies LLP
Charles works with a broad range of commercial, public sector, charitable and individual clients, advising them on public law issues including judicial review, human rights, information law and the powers and duties of local and other public authorities. He is named by Chambers & Partners in both Competition Law and Administrative & Public Law.
Charles Livingstone

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