Public procurement in the UK has undergone its most significant transformation in decades. With the Procurement Act 2023 came into force on 24 February 2025, organisations bidding for public sector contracts must understand the revised financial thresholds that dictate when full procurement procedures apply. These thresholds determine whether a contract must be advertised and follow regulated processes.
Failing to grasp these changes could mean wasted resources on ineligible bids or missed opportunities on contracts previously out of reach. This blog outlines:
- The updated thresholds introduced via Schedule 1
- Why these changes have been made
- How they affect suppliers and contracting authorities
- How to prepare your organisation for the new regime
1. What Changed from February 2025?
The Procurement Act 2023 replaces the previous procurement regulations (such as the Public Contracts Regulations 2015) with a single, streamlined framework. As part of this shift, the financial thresholds that determine whether procurement rules apply are being updated to reflect:
- The UK’s commitments under the WTO Government Procurement Agreement (GPA)
- Currency fluctuations via updates to Special Drawing Rights (SDRs)
These thresholds are updated every two years and reflect VAT-inclusive values.
From 24 February 2025, the following thresholds apply to contracts awarded by central government, sub-central authorities (e.g., local councils), utilities, and other bodies.
2. New Procurement Thresholds
| Contract Type | Threshold (incl. VAT) |
|---|---|
| Central Government – Goods & Services | £139,688 |
| Sub-Central Authorities – Goods & Services | £214,904 |
| Works (All Bodies) | £5,372,609 |
| Light Touch Regime (LTR) Services | £663,540 |
| Utilities – Goods & Services | £429,809 |
| Concessions | £5,372,609 |
These figures replace the previous thresholds from 2022–23 and bring clarity to which procurement procedures apply under the new regime.
3. Why the Change Happened?
Thresholds are reviewed biennially to align with the UK’s international obligations and to reflect currency exchange rates. This ensures fair market access and compliance with the WTO GPA.
The updated thresholds:
- Provide consistency across central, local, and utility sectors
- Reflect the UK’s post-Brexit freedom to develop its own procurement framework
- Align more accurately with economic conditions and procurement risk profiles
4. What Does This Mean for Bidders?
Understanding thresholds is not just about eligibility. It helps bidders:
- Target the right opportunities: Avoid wasting time on contracts that won’t be advertised.
- Tailor bids: Prepare appropriate resources based on anticipated procurement routes.
- Comply with rules: Ensure submissions meet transparency and compliance expectations.
- Improve win rates: Focus effort where success is more likely.
If a contract is valued below threshold, authorities may use more flexible procurement routes (e.g., direct award or limited competition). If above, more formal procedures and notices (e.g., Ask A bid Writer) must be used.
5. Key Takeaways for Procurement Teams and Suppliers
- Monitor contract values: Include VAT and contract extensions in your calculations.
- Adjust internal thresholds: Update systems and checklists to reflect new values.
- Understand notice obligations: Familiarise yourself with the UK notice types (UK1 to UK16).
- Anticipate PPN updates: Thresholds will next be reviewed in late 2025 for January 2026 application.
FAQs:
Q: When did the new thresholds apply?
A: From 24 February 2025, as part of the Procurement Act 2023 implementation.
Q: Do the thresholds include VAT?
A: Yes, all thresholds are inclusive of VAT.
Q: Will thresholds change again?
A: Yes, they are reviewed every two years. The next update will likely apply from January 2026.
Q: What is the Light Touch Regime?
A: A simplified procurement process for certain services (e.g., health, education, welfare), which applies only if the contract value exceeds £663,540.
Q: Where can I find current tender notices?
A: Via the Ask A bid Writer.
Why Work With Hudson Outsourcing?
At Hudson, we support businesses of all sizes to interpret legislation and maximise their success in bidding for public sector work. Here’s how we help:
- Bid-readiness audits aligned to the new Act
- Real-time monitoring of contract values and notice types
- Strategic bid planning across frameworks and contracts
- Hands-on support with notice drafting and submission
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Get in touch with us today to explore how you can turn the Procurement Act changes into a competitive advantage.