Looking at the OJEU financial thresholds process

Financial thresholds - Integrated currencies and legislation

Like much of the legislation and directives around the European tendering sector, the rather dry language used in much of the documentation can render it rather difficult for alot of businesses to comprehend. Like all legal language however, it can be broken down into terminology that anyone can understand – its just that no-one really ever does it, therefore we thought we’d trawl through various websites and blogs give it a go.

What is a threshold?

Threshold, Definition: (from The Free Dictionary)

The place or point of beginning; the outset.

Of course, in terms of tendering for contracts, thresholds apply to the financial aspects of any particular tender. These thresholds define whether or not a contract opportunity must be published in the OJEU (Official Journal of the European Union).

Procurement directives from the European Union (guidance PDF) stipulate that public sector organisations, as well as private companies operating in the water, energy, transport and postal services (collectively referred to as Utilities), have to publish OJEU notices advertising that a competitive tendering process for a particular contract is underway.

However, due to the sheer number of tenders offered on a daily basis throughout Europe, forcing each of these to publish in the OJEU would be an administrative nightmare and impossible to keep track of. Therefore, legislators within the EU set a series of financial thresholds, above which it is required for a contract opportunity to be advertised.

Yet more acronyms become involved…….

Things get complicated when external bodies outwith the EU become involved. Essentially, the OJEU thresholds are updated every two years in line with World Trade Organisation legislation (the Government Procurement Agreement – GPA) – to which the European Union is a signatory. Confusingly, whilst European legislation sets out the thresholds in Euro currency, the GPA defines them in the form of something known as Special Drawing Rights (SDRs).

(Deep breath). SDRs are an asset established by the International Monetary Fund (IMF) – sorry yet another acronym.  SDR value fluctuates on a daily basis and is based on the relative values of the Euro, Sterling, Japanese yen, and the US dollar. The bi-annual updates to the EU thresholds factor in relative movement between the SDR and the Euro (see the document here). Obviously for those outwith the Eurozone (i.e. the UK) there has to be a further alteration to the figures in order to bring them into line with the new threshold levels – luckily some legal minds at the EU publish these for our benefit (PDF). (Breathe out).

What are the current OJEU thresholds?

Public contracts from January 2010

	SUPPLIES	SERVICES	WORKS
Schedule 1 entires	£101,323 (€125,000)	£101,3232 (€125,000)	£3,927,260 (€4,845,000)
Other public sector contracting authorities	£156,442 (€193,000)	£156,442 (€193,000)	£3,927,260 (€4,845,000)
Indicative Notices	£607,935 (€750,000)	£607,935 (€750,000)	£3,927,260 (€4,845,000)
Small lots	£64,846 (€80,000)	£64,846 (€80,000)	£810,580 (€1,000,000)

Utilities contract thresholds from January 2010

	SUPPLIES	SERVICES	WORKS
All sectors	£313,694 (€387,000)	£313,694 (€387,000)	£3,927,260 (€4,845,000)
Indicative Notices	£607,935 (€750,000)	£607,935 (€750,000)	£3,927,260 (€4,845,000)
Small lots	£64,846 (€80,000)	£64,846 (€80,000)	£810,580 (€1,000,000)

There are exceptions to these thresholds, each of the following have a threshold of £156,442 (€193,000).

• Part B (residual) services
• Research & Development Services
• Television and Radio Broadcast services
• Interconnection services
• Integrated telecommunications services

Thanks very much for persevering with this post, the threshold issue is rather complex – we hope that things are slightly clearer. If there are any other resources which you feel could be useful is helping us to understand this issue then please point us in the right direction.