Changes to UK Public Procurement Thresholds
As the calendar turned to 2024, significant changes swept through the UK public procurement landscape, ushering in a new era of thresholds and regulations. The much-anticipated increase in procurement thresholds has sent ripples of excitement and anticipation throughout the business community, promising a shift in opportunities and competition for works, services, supplies contracts, utilities contracts, and concessions.
With these changes taking effect on January 1st, businesses and bidders alike are bracing themselves for a transformed playing field that could reshape the dynamics of public sector contracting. Whether you’re an established vendor or a budding entrepreneur eyeing government contracts, the altered landscape presents both challenges and opportunities that demand attention.
What are the New Public Procurement Thresholds?
Public procurement regulations saw a slight shift at the beginning of the year, with new thresholds implemented for contracts entered into on or after 1st January 2024. Here’s a breakdown of the changes:
Public Contracts
Central Government Authorities (Supplies & Services) — £139,688 (Previously £138,760)
Other Public Sector Authorities (Supplies & Services) — £214,904 (Previously £213,477)
Works — £5,372,609 (Previously £5,336,937)
Utilities
Service and Supplies — £429,809 (Previously £426,955)
Works — £5,372,609 (Previously £5,336,937)
Concessions
Concession Contracts — £5,372,609 (Previously £5,336,937)
Defence and security, small lots thresholds, and light touch regime thresholds remain unchanged.
What do the Changes Mean for Buyers?
- Simplified procedures for low-value contracts: Contracts below the new thresholds (approximately £430,000 for services and goods, and £5.37 million for works) don’t require the full open procurement process. This frees up resources and streamlines procurement for smaller contracts.
- Increased competition, potentially lower prices: Lowering the threshold for open procedures (above £430,000) opens up the competition pool to a wider range of suppliers, potentially driving down prices and improving quality.
- Compliance considerations: Ensuring accurate VAT calculations in contract values to determine the correct threshold is crucial.
What do the Changes Mean for Bidding Parties?
- More Opportunities for Smaller Businesses: Entering the public procurement space becomes easier for smaller firms with contracts below the new thresholds.
- Increased Competition in Open Procedures: With more players in the game, standing out becomes crucial. Focus on clear proposals, competitive pricing, and highlighting unique strengths.
- Staying Informed: Understanding the updated thresholds and procurement procedures is essential to avoid missing out on suitable opportunities or falling foul of compliance regulations.
Impact on Different Sectors
These changes can have varying effects depending on the industry. Sectors with high-value projects like construction might see minimal impact on overall procurement procedures. In contrast, service-based sectors with smaller contracts, like IT or consultancy, could see a significant shift towards more open competition.
Future Implications:
While the current changes are relatively minor, they point towards a trend of potentially lowering thresholds in the future. This could further promote smaller business participation and increase competition in public procurement.
Win New Contracts with Your Tender Team
The new UK public procurement thresholds have opened up a wealth of opportunities for businesses to secure lucrative contracts. With higher thresholds in place, more contracts are accessible to a wider range of companies, providing a chance for growth and development.
For those seeking assistance with bid preparation, Your Tender Team offers expert guidance and support. Our experienced team can help you navigate the complex bidding process and give you the best chance of success. Contact Your Tender Team today on 0116 218 2700 for a free, no obligation quote.