Contracting authority and utility

A contracting authority is a public body, or a body funded or controlled by public bodies, that buys for a public purpose. A utility is a buyer that carries out a network activity such as water, energy, transport or postal services. The Procurement Act 2023 covers both, but applies lighter rules and higher thresholds to utilities.

How it works

Section 2 of the Procurement Act 2023 (verified 2026-09-05) defines contracting authorities: central government departments and their agencies, non-departmental public bodies, local authorities, NHS bodies, police and fire services, universities and colleges, housing associations and other bodies governed by public law that are publicly financed or controlled. Section 6 and the Act's schedule of utility activities cover utilities: water, gas, electricity, heat, public transport, ports and airports, postal services and the extraction of oil, gas and solid fuels. Public sector utilities apply most of the Act; private utilities, which hold a special or exclusive right rather than public ownership, apply a reduced set of duties.

The distinction changes the money. From 1 January 2026 the threshold for goods and services is £135,018 for a central government authority, a category that includes NHS trusts and NHS foundation trusts, and £207,720 for a sub-central authority such as a council or a university, against £415,440 for a utilities contract; the works threshold is £5,193,000 for everyone. All UK figures include VAT, unlike the EU thresholds that still apply in Ireland, which are net of VAT.

Devolution matters too. The Act applies in England, Wales and Northern Ireland; Scottish devolved buyers continue under their own 2014 Act and 2015 regulations and advertise on Public Contracts Scotland. Irish contracting authorities and utilities apply the 2016 procurement regulations and publish on eTenders.

What it means for a bidder

Identifying the type of buyer tells you what procedure and what level of formality to expect. A £300,000 services contract from a district council is above threshold and fully regulated; the same contract from a utility stays below its threshold and can be bought far more simply, with negotiation available.

Do not restrict your prospecting to councils. Utilities, housing associations, NHS trusts, universities and arm's-length companies are substantial buyers, and some attract fewer SME bidders. Their notices appear on the same portals: Find a Tender, Public Contracts Scotland, Sell2Wales, eTendersNI and the buyers' own systems below it.

Remember that some private bodies, including certain housing providers and concession holders, are covered by the rules without anything in their name suggesting it.

Example

A fictional English passenger transport executive, a utility for its bus network, tenders vehicle cleaning at an estimated £400,000 over four years. That is below the £415,440 utilities threshold, so it runs a simple competition with negotiation. The same work bought by the combined authority itself, as a contracting authority, would have passed the £207,720 threshold and required a regulated above-threshold procedure.

Frequently asked questions

Can a private company be a contracting authority?

Yes, where it was created to meet a need in the general interest and is mainly financed or controlled by public bodies. Many housing associations fall into this category.

What changes in practice for a bidder?

Utilities have higher thresholds and more procedural freedom. The rules on eligibility, submission and challenge are broadly the same.

Can one organisation be both?

Yes, depending on the activity being bought for. A council-owned energy company is a common example.

Related terms

• Public procurement
• Procurement thresholds
• Public contract
• Supplier, bidder and contractor
• Government Commercial Agency and central purchasing bodies