Procurement Reform (Scotland) Act 2014 thresholds: consultation
We are inviting views on options to amend the goods, services, works and community benefit financial thresholds within the Procurement Reform (Scotland) Act 2014.
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Procurement Reform (Scotland) Act 2014 thresholds: consultation document
Summary
This consultation seeks views on amending the goods, services, works and community benefit thresholds within the Procurement Reform (Scotland) Act 2014.
Overview
When public bodies buy goods, works or services they must follow certain rules set out in law. Which rules apply to the award of a contract is determined by the value of that contract.
The Procurement Reform (Scotland) Act 2014 (the Act) puts some rules in place. These rules:
- require contracts to be advertised
- set out some standards which govern the tender process, and
- put other duties on public bodies. The duties are described further in this document. These duties apply as well as rules which originally came from EU Directives, and which implement international agreements.
The Act only applies to contracts worth more than a specified amount. These values are known as ‘the Act’s thresholds’.
The Act’s thresholds have not changed since the Act was passed in 2014. The impact of inflation between 2014 and now has been significant. It has had the effect of “lowering” the Act’s thresholds in real terms. This consultation seeks your views on whether these thresholds should be changed, and if so, by how much.
The regulation of public procurement in Scotland
Public procurement in Scotland can be broadly divided into three categories, based on the value of the contract:
- “Higher value contracts” are regulated by The Public Contracts (Scotland) Regulations 2015 (the 2015 Regulations). These regulations apply financial thresholds set in the World Trade Organization’s Agreement on Government Procurement (“the GPA"). Every two years these figures are recalculated to reflect changes in the value of sterling, but otherwise remain stable
- “Regulated contracts” are those governed by the Act because they have a value equal to, or greater than, the thresholds in the Act
- “Unregulated contracts” are contracts with a value less than the Act’s threshold
The Act also contains a threshold for community benefits. A community benefit is a contractual requirement put in place by a public body relating to:
- training and recruitment
- the availability of sub-contracting opportunities, or
- which is otherwise intended to improve the economic, social or environmental wellbeing of the authority's area in a way additional to the main purpose of the contract in which the requirement is included
The community benefit threshold is currently set at £4 million. This means that buyers intending to carry out a procurement worth £4 million or more must, before carrying out the procurement, consider whether to include community benefit requirements as part of the contract. More information on community benefit requirements is in Part 2 of this document.
| Unregulated contracts | The Act Regulated contracts | 2015 Regulations Higher value contracts | |
|---|---|---|---|
| Public contracts (other than a public works contract). These are often referred to as goods and services contracts | Contracts worth less than £50,000 | £50,000 | Central government bodies: £139,688 inc. VAT (£116,407 excl 20% VAT) All other bodies £214,904 inc. VAT (£179,087 excl 20% VAT) |
| Public works contracts | Contracts worth less than £2,000,000 | £2,000,000 | All bodies £5,372,609 inc. VAT (£4,477,174 excl 20% VAT) |
| Community benefits | Contracts worth less than £4,000,000 | £4,000,000 | N/A |
Table 1 – threshold values for unregulated contracts, regulated contracts, higher value contracts and the requirement to consider including community benefit requirements.
Amending the Act’s thresholds: context
Sections 3(3) and 25(5) of the Act allow Scottish Ministers to change the Act’s thresholds.
This consultation has two parts. Part one of the consultation sets out options for changing the Act’s goods, services and works thresholds. Part two sets out options for amending the community benefits threshold.
There is an important relationship between the community benefits threshold and the Act’s goods, services and works thresholds. The threshold from which the Act’s duty to consider community benefits cannot be lower than the threshold from which a contract is regulated by the Act. This may mean that not all combinations of the options presented in this consultation are compatible with each other. We will have to take this into account when considering people’s responses to this consultation.