What are the thresholds for public sector procurement in 2026?

In 2026, the public sector procurement thresholds in the UK are set under the Procurement Act 2023, which replaced the previous PCR 2015 regime. The thresholds determine when a contracting authority must follow a full competitive procurement process, and they vary depending on the type of contract and the category of contracting authority. This article answers the most common questions about how the 2026 thresholds work in practice.

How have UK procurement thresholds changed for 2026?

The UK procurement thresholds for 2026 are governed by the Procurement Act 2023, which came into force in February 2025 and replaced the Public Contracts Regulations 2015 (PCR 2015). The thresholds themselves are set in line with the World Trade Organization Government Procurement Agreement (WTO GPA) and are reviewed periodically. For 2026, the thresholds remain consistent with those introduced at the launch of the Procurement Act 2023.

The most significant change in recent years was not a numerical adjustment to the thresholds but the replacement of the entire legislative framework. The Procurement Act 2023 introduced a new set of procedures, greater flexibility in how contracting authorities run competitive processes, and a stronger emphasis on transparency and value for money. The old OJEU thresholds, which applied when the UK was a member of the European Union, no longer apply as a separate concept: the current UK thresholds serve the same gatekeeping function and are set at broadly equivalent levels.

Contracting authorities that were familiar with the PCR 2015 thresholds will find the 2026 figures recognisable in scale, but the procedural rules that apply once a threshold is crossed have changed substantially under the new Act.

What are the current thresholds for works, goods, and services?

The current UK procurement thresholds for 2026 distinguish between works contracts and contracts for goods and services, and they also vary depending on the type of contracting authority. For central government authorities, the threshold for goods and services contracts is approximately £139,688. For sub-central authorities, which include local authorities, NHS bodies, and other public organisations, the goods and services threshold is approximately £214,904. The works threshold applies at approximately £5,372,609 for all contracting authorities.

Light touch regime contracts, which cover certain social, health, and other specified services, carry a higher threshold of approximately £663,540. These thresholds are expressed in pounds sterling following the UK’s departure from the EU, whereas they were previously denominated in euros under the OJEU system.

It is worth noting that these figures can be subject to periodic review and upward revision in line with WTO GPA negotiations. Contracting authorities should always verify the current thresholds against the latest official guidance from the Cabinet Office or the relevant regulatory body before committing to a procurement route, as relying on outdated figures can create compliance risk.

Do the 2026 thresholds apply differently to central and local government?

Yes, the 2026 procurement thresholds apply differently to central government and sub-central authorities. Central government departments face a lower threshold for goods and services contracts, meaning they must follow the full competitive procurement requirements at a lower contract value than local authorities, NHS trusts, housing associations, and other sub-central bodies.

This two-tier structure reflects the different procurement environments in which these organisations operate. Central government bodies typically have greater internal procurement capacity and are subject to closer scrutiny over public spending, which is why the threshold is set lower. Sub-central authorities, which often manage a wider range of smaller and more localised contracts, are given a higher threshold before the full competitive obligations apply.

In practice, this means that a local authority procuring a services contract worth £180,000 would not be required to run a full above-threshold process under the Procurement Act 2023, whereas a central government department procuring the same contract at the same value would be. Both categories of authority are still required to act transparently, achieve value for money, and comply with their own internal governance rules regardless of whether a contract sits above or below the relevant threshold.

What happens when a contract value is below the threshold?

When a contract value falls below the relevant procurement threshold, the contracting authority is not legally required to follow the full competitive process set out in the Procurement Act 2023. However, this does not mean that below-threshold contracts are unregulated. Contracting authorities are still expected to act in accordance with public law principles, including transparency, equal treatment, and value for money.

Most contracting authorities have their own standing orders or internal procurement policies that set out the rules for below-threshold spending. These typically require a minimum number of quotes for lower-value contracts, with the number of quotes increasing as the contract value rises toward the threshold. Common internal frameworks include:

• A single quote or waiver for very low-value purchases, often below £5,000 to £10,000
• Three written quotes for contracts in the mid-range, often between £10,000 and £50,000
• A more structured mini-competition or request for proposal for contracts approaching the threshold

The Procurement Act 2023 also introduced new transparency obligations that extend to some below-threshold contracts. Contracting authorities are required to publish certain contract award notices even for below-threshold spending, which represents a tightening of the rules compared to the previous PCR 2015 regime. This means that even where the full competitive process is not required, contracting authorities need to maintain clear records and be prepared to demonstrate how they achieved value for money.

How are contract values calculated to determine the right threshold?

Contract values for the purpose of determining the applicable procurement threshold must be calculated on the basis of the total estimated value of the contract over its full term, including any options or extensions. Contracting authorities cannot split a contract artificially to bring it below the threshold: this practice, known as disaggregation, is explicitly prohibited and can result in legal challenge.

The calculation rules under the Procurement Act 2023 require contracting authorities to take into account the following when estimating contract value:

• The full duration of the contract, including any extension periods
• Any options for additional goods, services, or works that may be exercised
• Any renewals or repeat purchases that form part of the same arrangement
• Framework agreements, which must be valued based on the maximum estimated value of all call-off contracts that could be placed under the framework

For contracts of indefinite duration or where the total value is genuinely uncertain, the estimated monthly value is multiplied by 48 to produce a four-year equivalent for threshold comparison purposes. Getting the estimated value right is important not only for compliance but also for ensuring the procurement strategy is appropriate. Underestimating contract value is one of the more common sources of procurement risk, particularly for organisations that do not carry out regular spend analysis or contract reviews.

What are the procurement threshold rules for utilities and defence?

Utilities and defence contracts are subject to separate threshold rules under the Procurement Act 2023. Utilities, which cover organisations providing water, energy, transport, and postal services, operate under the Utilities Contracts Regulations, and their thresholds are set at a higher level than those for standard public contracts. For 2026, the utilities threshold for goods and services is approximately £429,809, and the works threshold is approximately £5,372,609.

Defence and security procurement is governed by the Defence and Security Public Contracts Regulations 2011 (DSPCR), which remains a separate regime. Contracts falling within the scope of defence and security procurement have their own threshold levels and procedural requirements, reflecting the sensitive nature of the subject matter and the specific rules that apply to classified or operationally sensitive purchasing.

It is also worth noting that certain utilities and defence contracts may be exempt from the standard threshold rules altogether, particularly where national security considerations apply or where the contract falls within a specific exemption category. Contracting authorities operating in these sectors should seek specialist advice to confirm which regime applies to each contract and what obligations flow from it, as the consequences of misclassification can be significant.

How eXceeding helps with public sector procurement thresholds

Navigating procurement thresholds, selecting the right procedure, and staying compliant under the Procurement Act 2023 require both technical knowledge and practical experience. eXceeding supports public sector organisations at every stage of this process. Here is how:

• Threshold and compliance assessment: eXceeding reviews your contracts and spend to confirm which thresholds apply and which procurement route is required, reducing the risk of challenge or non-compliance.
• Running compliant tenders: Where a contract sits above the threshold, eXceeding designs and manages the full competitive process on your behalf, from strategy through to award.
• Below-threshold governance: For below-threshold contracts, eXceeding helps organisations establish internal frameworks that meet public law principles and stand up to scrutiny.
• Procurement resourcing: Where your team lacks the capacity or expertise to manage threshold-sensitive procurements, eXceeding can place skilled interim procurement professionals quickly to fill the gap.
• Procurement Act 2023 readiness: eXceeding helps organisations understand and adapt to the new legislative framework, including the transparency obligations that now extend to below-threshold activity.

If you are unsure whether your contracts are compliant with the 2026 thresholds or need support running a procurement process under the Procurement Act 2023, get in touch with the eXceeding team to discuss how we can help.

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