‘Lower value’ procurement thresholds to double from 1 April 2027

The Scottish Government has published a draft statutory instrument that will double the thresholds at which Scotland’s ‘lower value’ procurement regulations apply to public contracts.

Assuming that the Scottish Parliament approves the order, from 1 April 2027 the Procurement Reform (Scotland) Act 2014 (“Reform Act”) will apply to public contracts for goods and services with a value of £100,000 or more and to public contracts for works with a value of £4 million or more (not including VAT).

This comes after the thresholds for ‘higher level’ regulated procurements were reduced on 1 January 2026, as we discussed in a previous blog. Once different approaches to VAT are factored in, the changes have the effect of significantly narrowing the scope of the lower value regime.

Two levels of procurement regulation

As things currently stand public contracts in Scotland are subject to two separate but sometimes overlapping regulatory regimes:

• The Reform Act and the Procurement (Scotland) Regulations 2016 apply to public contracts for goods and services with a value of £50,000 or more and to public contracts for works with a value of £2 million or more (excluding VAT).

• The Public Contracts (Scotland) Regulations 2015 apply to public contracts for goods and services with a value of £135,018 or more (in relation to central government bodies) or £207,720 or more (in relation to other contracting authorities), and to public contracts for works with a value of £5.193 million or more (including VAT).

Separate thresholds apply to utilities contracts and concessions – the proposed changes will not affect those contracts.

The draft Procurement Reform (Scotland) Act 2014 (Thresholds) Amendment Order 2027 will increase the lower-level thresholds to £100,000 and £4 million respectively but will not affect the higher-level thresholds.

Procurement processes that have already started under the current thresholds will not be affected.

If both sets of threshold are calculated exclusive of VAT the narrowing scope of the lower value regime is even more stark:

Simplification?

The purpose of the increased thresholds is to reduce the ‘administrative burden’ of the procurement regime, allowing for ‘quicker, less formal procedures’ for more lower value contracts and (ostensibly) making it easier for businesses to participate in the tender process (which is a little counterintuitive given that such contracts will no longer be subject to a legal requirement to have a tender process at all).

As inflation has eaten away at the lower value thresholds since they were set in 2014, the increase may be thought appropriate. However, the thresholds in the 2015 Regulations have largely stood still since 2015, notwithstanding inflation (other than increases to reflect the inclusion of VAT in the value calculation). That is because they reflect the thresholds laid down in international government procurement treaties.

The combined effect is, of course, that going forward vanishingly few public contracts will be procured under procedures set out in the Reform Act (though some provisions of the Reform Act, such as the sustainable procurement duty, also apply to contracts that are procured under the 2015 Regulations). Those parts of the Reform Act that do not relate to individual procurement exercises (for example that require annual procurement reports) are unaffected.

This threshold change may simplify the procurement landscape in Scotland somewhat. The question becomes this: does the size of the gap justify having a lower value set of procurement regulations at all?

If the 2015 Regulations are ultimately replaced in line with changes in the rest of the UK – or in line with mooted changes in the EU – will the opportunity be taken to similarly consolidate Scottish procurement rules into a single rulebook?

If you have any questions about how this change might affect your organisation please get in touch with Jamie Dunne, Charles Livingstoneor your usual Brodies contact.