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Aggregation rules and thresholds

The Procurement flowchart shows the purchasing thresholds that need to be followed when seeking to purchase goods or services.

Splitting of purchase orders to avoid any threshold is not permissible, as the Aggregation rule applies:

 

Contracts for Goods and Services

Procurement thresholds apply to the aggregate (total) value of all requirements for the purchase, lease, rental or hire of goods and services of a similar type. In judging whether supplies/services are “of the same type”, account should be taken, for instance, of whether they would normally be ordered together and/or from the same suppliers.

Aggregate values may be calculated by one of the following methods:

  • the estimated value of separate contracts for meeting a single requirement; or
  • the total value of goods and services purchased during the last financial year; or
  • the estimated total value of all contracts/orders expected to be placed in the next financial year, or during the term of the contract if that is longer; or
  • where contracts have no definite duration, 48 x the monthly value.

 

Contracts for Works

Where a single work involves more than one contract the estimated value of all the contracts must be aggregated to decide whether the threshold is reached. Where the threshold is reached each of the works contracts will be covered by the rules except small contracts (known as small lots) the value of which falls below the de minimis level provided for in the Regulations – see threshold value table:

 

Case Studies:

  • A single item of equipment costing £55,500 would be subject to a competitive tender process in conjunction with the Procurement office. This is a ‘single requirement’ and the aggregation rule would not apply, even if other departments separately determine that they have a need for similar equipment in the same year.
  • Equipment of a similar type, from the same supplier and part of the same grant/project, individually costing a few hundred or thousand pounds: this would be subject to the aggregation rule and the appropriate purchasing route for the aggregated value.
  • General office stationery or IT consumables, average order value e.g. £60, would be subject to the aggregation rule as the overall spend within the University as a whole is above £150,000. As the University has a contract in place for these goods, the individual staff orderer can place a direct PO with one of the contracted suppliers  following the framework agreement ordering guidance.

 

See also:
http://www.scotland.gov.uk/Topics/Government/Procurement/buyer-information/spdlowlevel/EUGuidance

http://www.legislation.gov.uk/uksi/2006/5/regulation/8/made