Thresholds and aggregation rules
The estimated value of a procurement (which excludes VAT) will determine what rules apply and is subject to aggregation rules
Procurement thresholds for sub-central public contract authorities (includes UK universities)
|Legal Procurement Thresholds||Goods and Services||Works|
|Scottish Reform Act Threshold||>£50,000||>£2,000,000|
|EU Procurement Threshold||>£189,330||>£4,733,252|
What are thresholds?
Public procurement rules are governed by thresholds. When a contract exceeds a threshold value, the University of Edinburgh has legal duties it must follow, and generally must conduct a formal competitive tender process.
There are three key procurement responsibilities for budget holders regarding thresholds:
- Estimate the value of your potential procurement to determine if any of these thresholds apply (excludes VAT)
- Determine if your requirement is a good, service or work (works have a higher threshold than goods or services)
- If you are not utilising a current University contract, you must contact the Procurement Office if you a) plan to repeat (or have already repeated) the purchase within 12 months for goods or 48 months for services or b) your purchase breaches the £50,000 threshold
How do I estimate a Public Contract value?
For the purpose of thresholds, the estimated value of a procurement must include all contractual considerations over the lifetime of the contract, excluding VAT. This includes any contractual costs e.g. delivery, service/maintenance, and even the value of potential options to renew or extend the contract. The estimated value is also subject to aggregation (see below).
While VAT is excluded from procurement thresholds, make sure you budget accordingly for VAT (VAT is included in Delegated authority Schedule Approval values).
Licensing or intellectual property arrangements may affect the contract value of certain services. In these cases, please seek advice from the Procurement Office.
Goods, services or works?
Budget holders also must know what kind of purchase they want to make. In procurement law, there are three categories: goods, services and works.
Goods (or Supplies) are tangible items, while Services are activities, and both have the same procurement threshold.
Works, on the other hand, refer to an architectural or engineering work, and they entail the combination of goods and services involved in construction projects, and many related activities (all listed in Annex II of the EU Procurement Directives).
Works are regulated at a much higher threshold and are subject to the University of Edinburgh Estates Department purchasing protocol. Please contact Procurement.Central_Estates@ed.ac.uk before purchasing works.
If the University makes multiple purchases of the same thing within a 12 month period (48 months in the case of services), then the value of each purchase aggregates together to determine whether a procurement threshold is breached.
- Example: If University budget holders purchase 3 microscopes with the same specification within a 1 year period for £40,000 (before VAT) each, then the actual total contract value with regard to procurement rules is £120,000 (breaching the Scottish threshold of £50,000, but not the EU threshold of £164,000). This is the case even when different suppliers are used or when different budget holders across the University make the purchases separately.
The purpose of aggregation rules is to prevent authorities from purposely evading legal responsibilities.
Each budget holder should monitor their own aggregated spend as outlined below for purchases outwith current University contracts. Purchases from current University contracts already account for these rules.
The Procurement Office is responsible for monitoring the University’s net aggregated spend retrospectively, across the Colleges and Schools to determine whether a University wide agreement should be out in place for future requirements.
Procedures for monitoring aggregation
For Goods—if you anticipate spending (or have already spent) more than £50,000 out with a University contract on the same item in the next 12 months, you must contact the Procurement Office
For Services—if you anticipate spending (or have already spent) more than £50,000 out with a University contract on the same service in the next four years (48 months), you must contact the Procurement Office
For Works—Subject to Estates Department Purchasing Protocol
Even below thresholds, the University has a legal duty to demonstrate adherence to the EU procurement principles of Equal Treatment, Non-discrimination, Mutual Recognition, Transparency, and Proportionality.
If you have queries about estimating contract value or aggregation rules, please contact Peter Hayakawa – Tel 651 4380