In March 2023, the Department of Public Expenditure and Reform issued updates to existing procurement guidelines This update, contained in Circular 05/2023, have made some significant changes to the thresholds for procurement and are intended to facilitate easier procurement for SMEs. To this end, there has been a loosening of procurement rules covering procurements of a value between €25,000 and €50,000. Below, we go through the most important changes to procurement regulations.
It should be noted that, at the time of publishing, the procurement guidelines PDF available on the Office of Government Procurement website has not been updated to take account of Circular 05/2023. However, Circular 05/2023 states that the new guidelines have come into effect immediately.
Changes to Procurement thresholds:
The updates have made changes to rules for procurement for goods and services and procurement for works. Under the previous guidelines relating to procurement for goods and services, there were three separate thresholds for procurement, each with a different set of requirements for a contracting authority. These thresholds were:
- less than €5,000;
- €5,000 – €25,000;
- €25,000 – EU threshold.
After the Circular 05/2023 revisions, these thresholds for procurement for goods and services are now as follows:
- less than €5,000;
- €5,000 – €50,000;
- €25,000 – EU threshold.
Guidelines for the €5,000 – €50,000 Procurement Threshold
The significant change here is clearly to the €5,000 – €50,000 threshold. What this means is that now procurement for goods and services for any amount within this range can be conducted according to the following guidelines:
- Seek at least three written tenders from interested and competent suppliers/service providers
- Evaluate offers against relevant requirements using a scoring sheet;
- Select the most suitable offer and advise all tenderers regarding the decision.
Previously, procurements above €25,000 were required to be conducted through a more extensive and formalized process. This included using an Open Procedure and advertising the contract on the eTenders website. These requirements now apply to procurements above €50,000. In other words, one way of understanding these changes is to see that the methods previously required for conducting procurement of a value between €5,000 and €25,000, now apply to conducting procurement of a value between €5,000 and €50,000.
However, it should be noted that there are several exceptions to this rule. Crucially, while procurement contracts between €25,000 and €50,000 do not have to be advertised on eTenders, contract award information does have to be published for these contracts. Upon award of the contract, you are still required to publish the contract information on eTenders, even if you are no longer required to advertise the contract on eTenders. Additionally, while there is no requirement to advertise on eTenders, the Circular still encourages contracting authorities to do so if they wish.
A further exception to the updates worth noting is that it remains the case that where Government Departments and Offices have agreed contracts above €25,000 without a competitive process, this should be reported to the Comptroller and Auditor General.
Works Thresholds and Other Issues in Circular 05/2023:
Similar to the goods and services changes, the thresholds related to works contracts have also been adjusted. Now, for works contracts of a value less than €200,000, it is sufficient to seek at least five written tenders from interested and competent contractors. As with procurement for goods and services, this represents a raising of the threshold.
However, the Circular is explicit in adding that “the threshold at which contracting authorities are required to advertise all contracts for works-related services remains at €50,000”. A typical example of this sort of service might be consultancy; for this sort of procurement, the threshold remains unchanged.
Finally, Circular 05/2023 does contain an extensive range of advice regarding how to go about conducting procurement. While this advice is not binding, it may be useful to for conducting procurement and includes recommendations such as:
- Undertake preliminary market consultations prior to tendering
- Subdivide contract into lots
- Sue Prior Information Notices to facilitate SMEs forming a consortium prior to tendering
- Use the “open procedure” for tendering where possible
- Ensure selection criteria set for tenderers are relevant and proportionate to the contract
- Ensure any turnover/financial capacity requirement is proportionate to the risk involved
- Indicate in tender documents where reasonable variants to the specifications are acceptable.
- Use a Dynamic Purchasing Systems (DPS) for the procurement of commonly used goods, works or services which are generally available on the market.
Dr. Conor Dowling