UK universities need to assess impact of the new Procurement Act

The Procurement Act 2023, which governs the award of public, utility, concession and defence contracts, finally came into force in February 2025. The Act brings significant changes to the field of public procurement in England, Wales and Northern Ireland and introduces greater flexibility in how ‘contracting authorities’ conduct competitive award procedures.

Public procurement expert Uddalak Datta of Pinsent Masons said that while the new regime has been touted by the government as the “largest shake up to UK procurement rules in history”, it has created some uncertainty for the higher education sector.

In recent years, there has been a growing trend of higher education institutions (HEIs), such as universities, declaring themselves to be outside of the scope of public procurement rules, because they find themselves increasingly funded by private sources instead of public funding.

“The key question universities are asking is how this new regime will affect the higher education sector. There are some technical changes, but most HEIs are working on the basis that the entities captured by the definition of a ‘contracting authority’ are the same under the new definition as under the old definition. They are assuming that organisations which were formerly subject to the previous regime will continue to be subject to the Act,” he said.

Chris Owens, universities expert at Pinsent Masons, confirmed that the government has indicated that, despite the different wording, there was no intention to change the scope of what constitutes a ‘contracting authority’. Nonetheless, he warned that the courts might take a different view.

The new regime notably allows for greater post-tender and preferred supplier negotiations, as part of the new flexibilities introduced in competitive procedures. This represents a “step-change” in how HEIs have been used to negotiating deals under the previous procurement regime.

“For universities, they could be tempted to make an early down-selection to a single preferred bidder. This approach could result in more efficient procurement and, ultimately, cost savings. But it needs to be balanced with the risk of challenge under the Act and ensuring that all bidders are treated equally,” said Owens.

HEIs not subject to the Act may be “indirectly” affected by the new procurement procedures and should keep a careful eye on these developments, according to Owens.

“Whilst we expect that in the short term, complicated procurements such as student accommodation design, build, finance and operate schemes will continue to be procured using a procedure that looks similar to the old-style competitive dialogue, it’s possible we will see innovation and efficiency measures emerge. HEIs outside of the scope of the Act may be able to learn from these emerging trends and practices,” he said.

However, HEIs outside of the scope of the regime could face some practical challenges. For example, the Cabinet Office has recently signalled that entities which are not contracting authorities will no longer be able to register and publish on the Find a Tender service, a UK government platform for tendering high-value public contracts. Under the previous regime, various universities have continued to publish larger opportunities on Find a Tender in order to achieve maximum publicity and market coverage. 

 “Those HEIs impacted by the change will need to consider alternative routes and make sure their soft market testing, or pre-procurement engagement with potential suppliers, is up to scratch,” said Datta.

The government’s decision to exclude HEIs which had declared themselves not to be contracting authorities from the latest round of the Public Sector Decarbonisation Scheme funding is another example of the challenges for those HEIs, he said.