Above and below threshold Tenders – what’s the difference?

Jun 26, 2020

Public sector procurement rules, which are agreed upon by all EU member states, provide parity for all suppliers, tendering for goods and services anywhere in the EU, effectively presenting ‘a level playing field’.

This central maxim has been the lodestar for all EU procurement and this degree of parity extends to the UK until the end of 2020, whereupon new arrangements related to the UK’s exit from the EU shall take place. As a major contributor to the EU, The UK had negotiated a significant amount of protections into the procurement rules.

As from 2021, UK tendering shall continue, however instead of sourcing tender opportunities on the EU’s ‘Official Journal of the European Union’ (OJEU), a UK only website called Find a Tender shall be in place. Even though the majority of procurement rules found in OJEU shall apply to Find a Tender, only UK-based businesses shall be able to tender for these contracts. One of the central tenets of the procurement rules to date has been the threshold of value that a contract should be worth, in order for it to be posted on OJEU. If the total contract value exceeds the stated threshold values for a given financial year, all public bodies across the EU that are posting a tender are obliged under EU procurement law to post the ‘above the threshold’ tender on OJEU. Again, this tenet will likely extend to Find a Tender for UK tenders from 2021. Threshold values are reviewed each year. Published on November 2019, the UK Government document entitled ‘Procurement Policy Note – New Thresholds 2020’, sets out the levels for 2020:

https://assets.publishing.service.gov.uk/.../PPN_for_New_Thresholds_2020_pdf.pdf.

So, what is the purpose of setting thresholds on tender values? There is a great degree of variation in public sector tenders, in terms of scope, contract lengths and values. Given that a significant number of tenders are simpler, more regionalised and of lower value, It simply would not be practicable therefore to post every tender on a central repository website, (such as OJEU) or for UK from 2021, Find a Tender. Lower value tenders are therefore only published on the public bodies own procurement section on its website, plus on certain domestic procurement portals. 

We know that some tenders (above the threshold) are posted on OJEU and lower (below the threshold) tenders are posted domestically, but other that the difference in the tender values, plus delegating lower value tenders off OJEU to manage capacity of the central site, are there any other material differences between (higher value) tenders that are published on OJEU and lower values that are not?

Well, yes. But it’s quite subtle.

The central maxim that all EU members states must abide by in relation to tendering is that the process is operated on a ‘level playing field’ with no possibility of favouritism shown to either a current incumbent nor a prospective new supplier. This approach is closely monitored to avoid collusive behaviour during the course of the tendering process. ‘Above the threshold’ tenders are subject to a high degree of scrutiny, with separate regulatory groups put in place to effectively cross-check that tenders have been score fairly.

Public bodies will avoid the possibility of being seen to act collusively at all costs for several reasons. Firstly, it would stop the tendering process, regardless of how far away from the deadline it had reached. Secondly, The EU can impose a fine on a public body directly and thirdly, it would damage the reputation of the public body, making it more difficult to attract the same number of tenderers. All public sector tenders should be managed in a way that maximises value for the cost of the procurement. All of the above three factors would not be in line with this intent. Consequently, tendering documents that are published for ‘above the threshold’ tenders do have a lot of compliance questions. These are to protect the tendering authority, to show that if a tender is investigated, that they can provide an audit trail of how they had screened prospective providers in line with EU rules during the tendering process.

From the tenderer’s perspective, this provides a level of protection that their tender submission shall be evaluated objectively, scored accordingly and that all participants have the same chance of selection, based on merit.

But what of ‘below the threshold’ tenders?

Broadly following the same rules as ‘above the threshold’ tenders, lower value tenders are run locally, directly by the tendering authority. Any scrutiny put in place would tend to be a group made up of the authority’s own personnel, not as with ‘above the threshold’ tenders, but procurement professionals from outside of the tendering authority. This immediately leads to a lower degree of scrutiny being in place for lower value tenders.

Business owners talk of seeing tenders from their own experiences, where it was a ‘shoe in’ and other such phrases. Broadly, this will be due to lower value tenders, where the authority in question is not subject to the same degree of scrutiny as higher value tenders that are posted on OJEU and soon to come for the UK, Find a Tender.

To overcome such experiences, Tenderwin only sources tenders that are published on OJEU and as from January 2021, Find a Tender. This approach affords our clients the greatest degree of protection, in terms of tendering processes being run on a level playing field.

If you would like to discuss how you can get the best chance of winning your next tendering project, contact Daniel Bouvet on (07990) 524513 or email Daniel here.