The new Procurement Bill raises important questions for higher education institutions

Blog | Education
Published: 19th May 2022
Area: Education

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The big news for procurement watchers is that the Government has finally published its Procurement Bill. The Bill follows a public consultation and announcement during the 2021-22 Parliamentary Session, but failed to find Parliamentary time.

The Procurement Bill re-regulating public sector procurement was introduced in the House of Lords on 11 May, and the Second Reading is scheduled for 25 May.

Which bodies are covered by the new procurement Bill?

The procurement rules in the Bill will apply to both public bodies and to utilities. So far, this simplifies the existing legislation by consolidating the regulation of public bodies and utilities under the current suite of rules: the Public Contracts Regulations (PCRs), Defence and Security Public Contracts Regulations, Concession Contracts Regulations and the Utilities Contracts Regulations.

The draft bill uses the defined term “public authority”, which excludes certain listed authorities. These excluded authorities include Scottish authorities, which are governed by the Scottish law regulations - those remain firmly aligned to the EU Directives, in case that particular parachute cord needs be pulled - and the security services.

What is the definition of “Public Authority”?

The concept of a public authority would be fine, but the Bill provides the entirely unhelpful non-definition of public authority as follows:

“’public authority’ includes any authority with functions of a public nature that:
(a) is funded wholly or mainly from public funds, or
(b) is subject to contracting authority oversight.”

Using the term “includes” unhelpfully means that the concept is now an open list. While those authorities which exercise functions of a public nature and are wholly or mainly publicly funded are within that list, conceivably this could also include those authorities which are not.

Unlike the current PCRs, this definition does not even include a legislative test which you can apply in order to determine whether an entity falls within the scope of the definition or not and leaves it to judicial discretion. This legislative approach where “you will know it when you see it” is completely counter to the principle of legal certainty.

It contrasts with, for instance, the Freedom of Information Act which contains a schedule clearly defining the scope of public authority for the purposes of that Act and is more in line with the definition of public authority in the Human Rights Act. It makes much more sense to adopt the FOI, rather than HRA definition as a matter of legal policy and principle: it would provide legal certainty and in principle, it shares the same underlying policy goal of FOI which is to provide transparency.

How does this affect higher education institutions?

The current procurement rules under the PCRs currently apply to higher education institutions to the extent that they derive more than 50% of their funding from public sources. There has always been a puzzle with determining whether Student Loans Company funding was treated as public funding or not. This is because on the one hand the funding is referable to a student, but on the other, the funding never leaves public control and even the ONS treats student loans, in part, as public funding on the basis that around 45% of them are never repaid.

With this definition we now have the double-puzzle of (a) identifying whether SLC funding is “public funds”; and (b) even if it is not, whether a higher education institution is nonetheless subject to the procurement rules if it exercises functions of a public nature.

You can find out more and register for a Government webinar tomorrow at the following website.

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Udi provides advice on all aspects of commercial law, including procurement and state aid law.



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