Section 42B

For the purposes of paragraph 3(2)(b) of Schedule 2 to the PA 2023 (exempted contracts), the calculation of the percentage of activities contemplated by the horizontal arrangement is to be made in accordance with this regulation. Subject to paragraph (8), the percentage of activities intended to be carried out other than for the purposes of the contracting authorities’ public functions is to be calculated by taking the non-attributable turnover generated by the horizontal arrangement’s activities as a percentage of the total turnover generated by the horizontal arrangement’s activities, over the relevant period. A horizontal arrangement’s non-attributable turnover is turnover generated by the horizontal arrangement’s activities that is attributable to purposes other than the contracting authorities’ public functions. Where the non-attributable turnover or total turnover generated by a horizontal arrangement’s activities is not available for the entirety of the relevant period because the arrangement was created, or the activities commenced, after the beginning of the relevant period, the non-attributable turnover and total turnover is to be calculated in accordance with paragraph (5). Non-attributable turnover and total turnover generated by a horizontal arrangement’s activities is to be calculated— where there has been no turnover at all during the relevant period, using credible business projections for a period of three years beginning with the date of contract award; in any other case, using— where, when combined, provide turnover information and projections for the entirety of the period of three years beginning with the date any turnover was first generated during the relevant period. any non-attributable turnover or total turnover, as the case may be, generated during the relevant period, and credible business projections, for a period beginning with the date of contract award, Where the non-attributable turnover or the total turnover generated by a horizontal arrangement’s activities for the entirety of the relevant period is, as at the date of contract award, no longer representative of the horizontal arrangement’s activities because the activities changed as a result of a reorganisation of the horizontal arrangement which occurred following the beginning of the relevant period, the non-attributable turnover and total turnover is to be calculated in accordance with paragraph (7). Non-attributable turnover and total turnover generated by a horizontal arrangement’s activities is to be calculated— where there has been no turnover generated after reorganisation or the change in activities, using credible business projections for a period of three years beginning with the date of contract award; in any other case, using— where, when combined, provide turnover information and projections for the entirety of the period of three years beginning with the date any turnover was first generated after reorganisation or the change in activities. any non-attributable turnover or total turnover, as the case may be, generated after reorganisation or the change in activities, and credible business projections, for a period beginning with the date of contract award, Where the percentage of activities intended to be carried out other than for the purposes of the contracting authorities’ public functions, calculated in accordance with paragraphs (2) to (7), does not satisfy the requirement in paragraph 3(2)(b) of Schedule 2 to the PA 2023, the percentage of activities may be calculated by taking, over the relevant period, any of the following that does satisfy that requirement— costs incurred in respect of the horizontal arrangement’s activities for purposes other than the authorities’ public functions as a percentage of its total costs; time spent in respect of the horizontal arrangement’s activities for purposes other than the authorities’ public functions as a percentage of its total time; the value of goods, services or works supplied in respect of the horizontal arrangement’s activities for purposes other than the authorities’ public functions as a percentage of the total value of goods, services or works supplied in respect of the activities. In this regulation— “accounting period” means a period in respect of which accounts are prepared in relation to the horizontal arrangement’s activities; “date of contract award” means the date when the contracting authority decided to award the contract; “horizontal arrangement’s activities” means the activities contemplated by, or undertaken in pursuance of, a horizontal arrangement; “relevant period” means— the period of three years ending with the date of contract award, or where, due to the timing of the preparation of accounts related to the horizontal arrangement’s activities, information relating to turnover for the period in sub-paragraph (a) is not available as at the date of contract award, a period of three years ending with the date the last accounting period before the date of contract award for which such information is available ends; “reorganisation” means a change, other than a minimal or incidental change, to any terms of the horizontal arrangement in respect of— the horizontal arrangement’s activities, or where the arrangement establishes a person to undertake those activities, the structure, operations, funding or ownership of that person.

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Source: legislation.gov.uk · retrieved 2026-09-04