Below-threshold contracts under the Procurement Act 2023: the official guidance, explained

The key facts

• A below-threshold contract, under section 5, is a contract for goods, services or works, a framework or a concession contract with an estimated value of less than the threshold amount for that contract type.
• A regulated below-threshold contract, under section 84, is a below-threshold contract that is not an exempted contract, a concession contract or a utilities contract.
• A contract is a notifiable below-threshold contract where its value is £12,000 or more including VAT for central government authorities, or £30,000 or more including VAT for all other contracting authorities.
• Section 85 stops contracting authorities restricting the submission of tenders by reference to supplier suitability, covering legal status, financial capacity and technical ability, with an exception for below-threshold works contracts above the relevant goods and services thresholds in Schedule 1.
• Section 86 requires authorities to consider the barriers SMEs may face, and whether those barriers can be removed or reduced, before inviting the submission of tenders. It does not apply to below-threshold contracts awarded under a framework.
• Where a notifiable contract is advertised, a below-threshold tender notice must be published on the central digital platform before the procurement is advertised anywhere else, with the information set out in regulation 24.
• There is no requirement to publish a below-threshold tender notice where an authority invites quotes, proposals or tenders from a closed group of pre-selected suppliers and does not advertise the procurement in any other way.
• A contract details notice must be published as soon as reasonably practicable after entering the contract: within 30 days for central government authorities, within 90 days for other authorities, and within 120 days for light touch contracts.
• Section 88 applies implied prompt payment terms to below-threshold contracts, mirroring the provisions at sections 68 and 73 for public contracts.
• Part 6 does not apply to exempted contracts under Schedule 2, concession contracts, utilities contracts, procurements by schools as defined in section 123, or transferred Northern Ireland authorities other than under reserved or devolved Welsh procurement arrangements.

What this guidance is and who it applies to

This is one of the technical guidance documents published to support the Procurement Act 2023, covering the rules that apply when a contract falls under the relevant threshold amount. It sits in the Define phase of the guidance suite, and like the rest of the suite it is there to help practitioners interpret the Act rather than replace it. It should be read alongside the Act and the regulations made under it.

The starting point is the definition at section 5. A below-threshold contract is a contract for the supply of goods, services or works to a contracting authority, a framework, or a concession contract, where the estimated value is less than the threshold amount for that type of contract. Section 84 then narrows the field to the contracts the Part 6 rules actually bite on: a regulated below-threshold contract is a below-threshold contract that is not an exempted contract, a concession contract or a utilities contract.

Several categories sit outside the regime. Part 6 does not apply to exempted contracts listed in Schedule 2, to concession contracts, to utilities contracts, to procurements by schools as defined in section 123, or to transferred Northern Ireland authorities except where they procure under reserved or devolved Welsh procurement arrangements. The section 85 restriction on assessing supplier suitability also does not apply to contracts awarded by a devolved Welsh authority other than under reserved arrangements.

The rules that apply below threshold

The first substantive rule is section 85, which prevents contracting authorities restricting the submission of tenders by reference to suppliers' suitability. In practice that closes off the pre-qualification stage: an authority cannot filter suppliers out before tender by assessing legal status, financial capacity, technical ability, professional misconduct, or insolvency and bankruptcy history. The guidance frames these assessments as disproportionate and resource intensive at this value, with the burden falling hardest on SMEs and voluntary, community and social enterprises. There is one carve out: the restriction does not apply to below-threshold works contracts valued above the relevant goods and services thresholds in Schedule 1.

The second is section 86, a positive duty rather than a prohibition. Before inviting the submission of tenders, an authority must consider the barriers that SMEs may face and whether those barriers can be removed or reduced. It does not compel any particular outcome, but it has to be discharged and, in any sensible reading, evidenced. It does not apply to below-threshold contracts awarded under a framework.

The third is section 87, which sets the publication requirements and turns on whether a contract is notifiable. A notifiable below-threshold contract is a regulated below-threshold contract with a value of £12,000 or more including VAT for a central government authority, or £30,000 or more including VAT for any other contracting authority. Where an authority advertises a notifiable contract, it must publish a below-threshold tender notice on the central digital platform before advertising the procurement anywhere else, containing the information set out in regulation 24. Importantly, the guidance confirms there is no requirement to publish a below-threshold tender notice where the authority invites quotes, proposals or tenders from a closed group of pre-selected suppliers, provided it does not advertise the procurement in any other way.

Section 87 also drives transparency at the other end. A contract details notice must be published as soon as reasonably practicable after entering into the contract, with outer limits of 30 days for central government authorities, 90 days for other contracting authorities and 120 days for light touch contracts. The information follows regulation 36, a lighter set than the section 53 requirements for public contracts. Section 88 then applies implied payment terms, mirroring the prompt payment provisions at sections 68 and 73.

What this changes and why it matters

The headline change is that low value buying is no longer a quiet corner. Once a contract crosses the notifiable value, its advertisement and its award both become visible on a single national platform, in a standard form, on a defined timetable. That is a meaningful shift in exposure for a spend band that many authorities have historically managed through local portals, framework call offs and habit.

The section 85 restriction also changes how the front end of a small procurement is designed. Authorities used to running a light supplier questionnaire before opening the tender have to rethink that step, because the suitability filter cannot sit ahead of tender submission. Capability still matters, but it has to be assessed within the tender rather than as a gate in front of it. Section 86 pushes the same way: considering SME barriers before inviting tenders is exactly the point at which lot structure, insurance levels, turnover expectations and timescales are still changeable.

Practical application

Start with valuation and classification. Estimate the value on the correct basis, decide whether the contract is below threshold under section 5, then check whether it is a regulated below-threshold contract under section 84 and not caught by the exclusions. Then test the value against the notifiable figures of £12,000 including VAT for central government and £30,000 including VAT for other authorities.

Next, decide the route deliberately. The guidance leaves room to approach a closed group of pre-selected suppliers for quotes without publishing a below-threshold tender notice, but that only holds if the procurement is not advertised in any other way. If it is advertised, the below-threshold tender notice must go on the central digital platform first, before any local portal, website or trade publication.

Then build the compliance points into the process itself. Record the section 86 consideration of SME barriers before tenders are invited, strip any pre-tender suitability gate out of the documents in line with section 85 unless the works exception applies, diarise the contract details notice against the correct deadline of 30, 90 or 120 days, and check that contract templates carry the implied payment terms under section 88.

How eSourcing Data helps

Below-threshold work is high volume and low ceremony, which is exactly why it slips. eSourcing Data gives teams a single workflow for this spend band, so the valuation, the classification against sections 5 and 84, and the decision on whether the contract is notifiable are recorded at the point they are made rather than reconstructed later.

The platform supports both routes the guidance allows. Where an authority is going out to the market, the below-threshold tender notice can be prepared and published to the central digital platform before any other advertising. Where the authority is inviting quotes from a closed group of pre-selected suppliers, the same workflow captures who was invited and why. Contract details notice deadlines of 30, 90 or 120 days are tracked from the date of entering the contract, so the obligation does not depend on someone remembering.

The design duties are supported too. Because section 85 removes the pre-tender suitability gate, evaluation is set up to assess capability inside the tender against published criteria, and the section 86 consideration of SME barriers can be captured in the approval record before tenders are invited. Reporting then shows low value activity alongside the rest of the pipeline.

What to do about it

1. 1Value the contract properly and confirm whether it is a below-threshold contract under section 5 and a regulated below-threshold contract under section 84.
2. 2Check the exclusions: exempted contracts under Schedule 2, concession contracts, utilities contracts, schools under section 123 and transferred Northern Ireland authorities.
3. 3Test the value against the notifiable figures of £12,000 including VAT for central government authorities and £30,000 including VAT for all other authorities.
4. 4Remove any pre-tender supplier suitability stage from below-threshold documents, unless the works exception in section 85 applies.
5. 5Record the section 86 consideration of SME barriers, and any changes made to reduce them, before inviting tenders.
6. 6Publish the below-threshold tender notice on the central digital platform before advertising the procurement anywhere else, using the regulation 24 information.
7. 7Diarise the contract details notice for 30 days, 90 days or 120 days as applicable, and check contract templates carry the section 88 payment terms.