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Nottingham University Public Procurement Course

Below threshold contracts and SMEs

Procurement iStock 000002542569XSmall 146x219Ruth Connorton and Wesley Hall examine below threshold contracts and the SME agenda in the light of the draft Public Contracts Regulations 2015 due to come into force this year.

The below threshold and SME provisions are voluntary UK drafting (rather than derived from the EU directive) and continue the theme of transparency and support for SMEs through government procurement, subjects also addressed in the December 2014 Public Accounts Committee report - Transforming contract management. 

Recommendations in that report also include the Cabinet Office investigating barriers to SMEs joining markets and what plans there are to address those barriers as well as demonstrating the consideration of disaggregation models for the delivery of major contracts. On the issue of transparency the report recommends that all service contracts be published including clear expressions of the performance that can be expected and how contractors are performing.

What is a "below threshold procurement"?

First of all let's be clear that these provisions only cover procurements for contracts which are below threshold where:

  • the procurement would have been subject to the Regulations if over threshold i.e. is not exempted or excluded and is:
  • over £10,000 (net of VAT) if a central government procurement;
  • over £25,000 (net of VAT) if a sub-central contracting authority procurement.

Note:
 Procurements of health services under the NHS (Procurement Patient Choice and Competition) (No 2) Regulations are not covered by these provisions at all.

Advertisement and publication of award information

Authorities are required to publish opportunities on Contracts Finder and that information must include at least:

  • the time by which a bidder must respond if interested;
  • how and to whom bidders respond;
  • any other requirements for participation.

Sufficient time should be allowed for interested bidders to be aware of the opportunity. Opportunities should not be advertised by other means before they appear on Contracts Finder and all relevant documents should be made available free of charge by a link.

Authorities do not have to publish on Contracts Finder if they award a contract without advertising the opportunity in any other way i.e. it makes an opportunity available only to a number of specific selected bidders (whether ad hoc or through a mechanism e.g. a framework call off).

Once a contract is awarded (whether advertised on Contracts Finder or not) the following information must be published on Contracts Finder:

  • winning contractor's name;
  • date of contract conclusion;
  • value of the contract;
  • if the contractor is a SME or a VCSE ( voluntary, community or social enterprise).

Note: Maintained schools and academies do not need to follow the Contracts Finder publication requirements.

No more PQQs but…

Authorities cannot use a pre-qualification stage for below threshold procurements but can ask "suitability assessment questions" during the tender process. These questions must be relevant and proportionate and can address minimum standards of suitability, capability, legal status and financial standing. Effectively this means running below threshold procurements in an open procedure style with suitability as part of the tender evaluation process rather than as a shortlisting or pre-sifting stage.

The get out of jail free card

Despite the stated obligations above the Regulations are clear that if a contract is entered into its validity will not be affected by any failure to comply. So whilst the obligations fit with the Government's wider SME agenda and promises regarding transparency and openness there are no remedies for failure to comply with these obligations!

That said the Regulations do not trump EU law requirements relating to below threshold procurements of cross-border interest and the obligation to follow the principles of transparency and equal treatment. Let's not forget the 2014 fate of Mansfield Council who saw 25% of an ERDF grant clawed back for its failure to even consider whether contracts were of interest to suppliers in other member states.

Payment terms protection

This provision applies to all procured contracts, both over and under threshold (except contracts for health services under the NHS (Procurement Patient Choice and Competition) (No 2) Regulations and contracts awarded by maintained schools and academies) and requires that contracts contain provisions requiring the authority to:

  • verify invoices without delay;
  • pay undisputed invoices within 30 days.

To support this authorities are required to publish online statistics, at least annually, showing the extent to which they have made payments in 30 days and where not, detailing the liability to pay and any actual payment of interest on late payments.

Ruth Connorton is a Partner and Head of Procurement Law and Wesley Hall is an Associate at DAC Beachcroft. Ruth can be contacted on 0191 404 4130 or This email address is being protected from spambots. You need JavaScript enabled to view it., while Wesley can be reached on 020 7894 6300 or This email address is being protected from spambots. You need JavaScript enabled to view it..