In this article, we discuss the impact of the Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026 (SI 2026/94) and what this means for contracting authorities.
What does the order do?
The Order, which applies only in England, permits certain contracting authorities to reserve below-threshold procurements to local or UK-based suppliers by disapplying section 17(5)(e) of the Local Government Act 1988 (the "Act").
Section 17 of the Act was designed to safeguard fair competition by preventing contracting authorities from taking non‑commercial considerations into account when procuring supply or works contracts. In particular, contracting authorities were prohibited from favouring or discriminating against suppliers based on their location or country of origin under section 17(5)(e).
The Order relaxes this position but only in relation to below-threshold contracts and only for specific authorities.
Which contracting authorities can rely on the order?
Only contracting authorities that are in scope of the Order are entitled to reserve below-threshold procurements by location. The particular contracting authorities in scope of the Order include:
- best value authorities as set out at section 1 of the Local Government Act 1999;
- all parish councils in England to which section 17 of the Act applies; and
- any joint committees that are exercising the same procurement functions for best value authorities or parish councils.
A separate regime applies to central government departments and their arm’s length bodies (e.g. executive agencies and non-departmental bodies), which is set out in Procurement Policy Note 005, published on 17 February 2025.
What has changed in practice?
By disapplying Section 17(5)(e), the Order allows contracting authorities in scope of the Order, before inviting tenders, to reserve a below-threshold procurement for the supply of goods, services or works to:
- UK-based suppliers; or
- suppliers based within a defined local area.
The decision to reserve a competition by reference to a supplier’s geographical location is voluntary. However, where a contracting authority chooses to do so, this must be clearly stated in the relevant below‑threshold tender notice for any advertised notifiable below‑threshold contract, or in the advertisement if the contract authority is procuring a relevant contract that is not a notifiable below-threshold contract (e.g. a contract with a value of less than £30,000, a concession contract, a utilities contract and a contract awarded by a school). The below‑threshold tender notice (or advertisement, if applicable) must specify whether the procurement is reserved to UK‑based suppliers or to suppliers within a defined “local area”. Where a local area reservation is applied, the contracting authority should also explain how that local area has been defined for the purposes of the procurement.
The option to reserve below-threshold procurements by location in accordance with the Order will also apply to frameworks and concession contracts.
Why does it matter?
The Order represents a significant shift in local government procurement policy by increasing opportunities for local businesses, including small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs). In particular, the ability to reserve below‑threshold procurements by geography may be used alongside existing SME and VCSE reservation options, enabling contracting authorities to design more accessible competitions that fuel local economic growth while remaining compliant with the wider procurement regime.
Importantly, any use of location‑based reservations must be applied proportionately and transparently and must remain compliant with the Order itself, the Procurement Act 2023 and the Procurement Regulations 2024.
