New Procurement Threshold Values Apply Across Europe from January 1, 2018

brexitEvery two years, the European Union updates the threshold values that trigger the need for a regulated public procurement exercise across Europe.  The financial thresholds effective from January 1, 2018 have now been published.

A series of three European Commission regulations published on December 18, 2017 amend the existing European directives that set out the EU public procurement rules.  The new thresholds apply from January 1, 2018.

Under the EU public procurement rules, all requirements leading to a contract awarded by a public or government body – including utilities and public concession contracts – must follow openly advertised tendering and contract award procedures, and comply with principles of transparency, fairness, and equality.  A number of exceptions exist, including that the rules apply to requirements above a certain financial threshold, i.e., small contracts are not required to follow the same rules.

The European Commission updates the EU-wide threshold values every two years in order to make sure that they are consistent with the thresholds under the World Trade Organization’s Government Procurement Agreement.  During the latest biennial review, the thresholds have been increased by approximately 6%.

The regulations have a direct effect in all EU Member States, and all EU Member States will have to apply the new threshold values to their national procurement rules.

The regulations prescribe the new threshold values in terms of euros, and a separate communication from the European Commission sets out how these new values should be translated into local currencies in EU Member States (such as the UK) that have not converted to use the euro.

The new threshold values that apply from January 1, 2018 are set out below.

For contracting authorities such as central government departments/agencies and local authorities, the new threshold (exclusive of VAT) will be:

  • €144,000 for supply and services contracts and design contests awarded by central government bodies.
  • €221,000 for supply and services contracts and design contests awarded by local or regional government bodies, or for authorities operating in the defense sector.
  • €5,548,000 for works contracts to be awarded by any contracting authority.

For contracting authorities and other regulated bodies that pursue activities in the utilities sector (e.g., operators of gas/electricity distribution networks and operators of public transportation services), the new thresholds (exclusive of VAT) will be:

  • €443,000 for supply and services contracts as well as design contests organised as part of procurement for services.
  • €5,548,000 for works contracts.

The threshold applicable under the Commission’s Concessions Directive (covering the right to build and/or use some form of public infrastructure or the right to exploit certain natural resources) will be €5,548,000 and the Concessions Directive will apply only to the award of concessions valued above that figure.