Draft Order laid allowing councils to reserve below-threshold contracts to local suppliers
The Cabinet Office and Ministry of Housing, Communities and Local Government have announced measures to allow local authorities to reserve below-threshold public contracts for local suppliers. The draft Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026 disapplies section 17(5)(e) of the Local Government Act 1988 (LGA 1988) to allow councils, police and fire authorities in England to reserve below-threshold contracts to UK-based or local area suppliers. The draft Order uses powers under section 19 of the Local Government Act 1999 and section 95 of the Procurement Act 2023 (PA 2023) to remove restrictions preventing local authorities from considering contractor location when awarding below-threshold public contracts. Under the amended rules, authorities in England will be able to reserve below-threshold contracts to UK-based suppliers and suppliers in a defined local area. The defined local area may include the authority’s own administrative area, plus neighbouring counties and London boroughs bordering the authority. Where an authority sits entirely within a single county or London borough, it can designate that entire county or borough as its local area. The Order disapplies the restriction in LGA 1988, s 17(5)(e) in relation to the award of below-threshold contracts only (as defined in PA 2023, s 5(5)). Authorities using the reservation powers must clearly advertise this in tender notices, specifying whether contracts are reserved for UK-wide or local area suppliers and defining the geographical boundaries where applicable.