From 1 January 2021, Contracting Authorities have new options available to them when procuring below threshold contracts under the Government's latest PPN. This might mean more opportunities for local or UK-wide suppliers, SMEs and VCSEs alike. 

As a reminder, the current thresholds are:

  • Supplies & Services - £122,976 
  • Works - £4,733,252

The new options for procuring contracts below these thresholds are:

  • to reserve the procurement by supplier location, either UK-wide or by county (metropolitan or non-metropolitan) where the supplier is based and has substantive business operations (for at least 12 months) (this should not preclude foreign suppliers from participating as long as they are based or established and have substantive business operations in the UK); and/or
  • to reserve the procurement for SMEs or VCSEs only. 

The hope is that the new options encourage greater transparency, tackle inequality and give everyone across the country the opportunity to fulfil their potential, as part of the Government's 'Levelling Up' agenda. 

The PPN recognises that markets with a broad range of suppliers of different types can "offer better value for money, promote innovative solutions and give public services access to expertise and knowledge on complex issues". This is not too dissimilar from the theme of the recent Green Paper (Transforming Public Procurement), published on the same day, which had a large focus on innovation and tackling economic inequality. 

Our Top Ten for authorities looking to use this new flexibility:

  • You can still choose to procure on an open basis without any reservation;
  • You still need to comply with your own internal guidance, governance and procedures and so you might need to update these;
  • If you do update these, keep appropriate records of any commercial decisions;
  • Similarly, if you do choose to reserve the procurement, you must record the rationale / approval of that decision (examples in the PPN include supporting domestic supply chains, promoting resilience, attracting new entrants to government markets, tackling economic inequality, supporting more localised recruitment, training, skills, investment and start-up businesses). Supporting examples should be included;
  • If you apply a county reservation, you should also demonstrate that you have considered any adverse effects of applying a narrower geographical reservation than usual, and why these were subsequently discounted;
  • You must be clear in procurement documentation about any intention to reserve the procurement (e.g. include the standardised definitions of SME / VCSE and/or supplier location);
  • You cannot undertake direct awards when reserving procurements under this policy;
  • You must continue to comply with all other legal requirements applicable to below threshold procurements;
  • Where needed, you must publish a contract notice on Contracts Finder for all advertised contract opportunities above £10k, and publish an award notice on Contracts Finder for all awarded contracts, irrespective of whether or not they have been advertised, above £10k. You should also publish the contract documents for each contract on Contracts Finder in accordance with transparency guidelines and state your intention to reserve a procurement by supplier type and / or location within the Opportunity Notice; and
  • Finally, this policy should not be applied to below threshold procurements which are of crossborder interest or for supplies, services or works procurements where goods are to be provided into Northern Ireland and where there is cross-border interest.

Key Contacts

Michael Rainey

Michael Rainey

Partner, Commercial
United Kingdom

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Louise Dobson

Louise Dobson

Co-Head of Healthcare
United Kingdom

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