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EU Threshold Update

Happy New Year!  The 1st January has brought in updates to both the UEA tendering thresholds and the EU Procurement limits, please read on for further details.

 

As of 1st January 2016 the following new EU procurement thresholds apply:

 

Goods and Services

£164,176 (excluding VAT)

Works

£4.1m (excluding VAT)

 

These thresholds will now be in place until 31st December 2017.

 

Which category does my procurement fall into?

 

There are two reasons to consider the contract classification (goods, services or works):

1)      Does it cross the EU Thresholds

2)      What type of terms and conditions should be used (JCT etc.)

 

You cannot deem a contract to be works to avoid the lower goods and services threshold.  It should also be noted that just because the contract requires construction terms and conditions it doesn’t make it a works contracts.

 

The Public Contracts Regulations 2015 provide a list with Schedule 2 of the CPV codes that are classified as works contracts.  If your requirement does not fall within this list then it is not classed as a works contract under the Regulations. 

 

If your contract contains elements of goods, services and works then you must use the ‘dominant purpose’.  I.e. is the main part of the contract goods, works or services. 

 

Aggregation

 

Regulation 5 of the Public Contracts Regulations 2015 requires you to aggregate your spend when assessing the value of your contract. 

We are required by law to ensure the estimate of the contract value is the total amount payable (excluding VAT).  This must include any form of option such as total contract length as set out in the tender.  If the contract is divided into Lots then the total combined value of these Lots must be used.

You may attract a different set of suppliers if the true value of the contract is known.  There is therefore a risk of challenge if the contract value is not estimated correctly. 

 

Below threshold procurements – what are the rules?

 

Whilst the full set of Public Contracts Regulations 2015 do not apply, we are still bound to purchase in the spirit of the Regulations.  Below the thresholds the University’s Financial Regulations apply.

The University has taken the decision to increase the value at which tenders must be sought, the aim of this was to align with the thresholds in the new Public Contracts Regulations 2015. The thresholds set out in the University’s Financial Regulations are as follows:

 

Threshold (excluding VAT)

Action Required

£0 to £5k

No requirements although it is worth shopping around to ensure value for money.

£5k to £25k

A minimum of three quotes to be obtained, you should get these in writing. This has increased from £20k.

£25k to EU Thresholds

Formal tenders must be sought, the Public Contracts Regulations 2015 do imply some requirements which you should make yourself familiar with. 

EU thresholds and above

We are legally required to follow the Public Contracts Regulations 2015.  Failure to do so can lead to a legal challenge.

 

Sustainability

 

We need to ensure that all of our purchases achieve value for money as well as generating benefits for the organisation, society and the economy whilst minimising damage to the environment.

Purchases should therefore be made based on factors other than just purchase price.  We should consider whole life costs which includes maintenance, running costs, asset life, disposal etc.   Consideration should also be given to methods other than purchase, this may include sharing, borrowing or leasing goods.

 

Should you require any further details please contact a member of the Purchasing Team.