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4 March 2026
Juli Lau and Shyann Sheehy look into the impact of the Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026, and particularly how local authorities can now reserve below-threshold contracts for UK or local suppliers.
On 4th February 2026, the Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026 (the “Order”) came into force, with supplementary guidance on reserving competition for below-threshold contracts published on 16th February 2026 (the “Guidance”). The Order allows (but does not mandate) certain contracting authorities (“Relevant Authorities”) to reserve competitions for below-threshold contracts to businesses based in their local area or in the UK. The government states that these changes have been implemented to boost local businesses.
The Order applies to all best value authorities set out in s.1 Local Government Act 1999 and parish councils in England to which s.17 of the Local Government Act 1988 (“LGA 1988”) applies. Local authorities are part of this group.
The Order does not however apply to central government departments and bodies, who should instead follow the guidance in PPN 005 (Reserving below threshold procurements). It also does not apply to contracts which fall within the remit of the Health Care Services (Provider Selection Regime) Regulations 2023.
Previously, Relevant Authorities were prevented, under s.17(5)(e) LGA 1988, from reserving any contracts by reference to the supplier’s geographical location. The Order now allows Relevant Authorities to disapply this restriction and reserve competition for contracts, frameworks and concession contracts which fall below the threshold amounts in Schedule 1 of the Procurement Act 2023, to the following types of suppliers:
A contractor is based within the UK where they have established substantive business operations, not taking account of the location of the corporate ownership or control of the contractor.
“Local area” is defined as follows:
Where there is one Relevant Authority:
Where there are two or more Relevant Authorities:
Where a Relevant Authority is wholly located in a county or London borough, the area of that authority may be either:
If there are two or more district councils entering into a below-threshold contract together, the local area can include the:
The same principle applies to unitary authorities which do not have the same boundaries as a county area set out in s.1 and Schedule 1 of the Local Government Act 1972.
Relevant Authorities must determine their local area by reference to where they primarily exercise their functions, but cannot state they have responsibility for the whole of England.
The local area reservation cannot be used to restrict the competition for a below-threshold contract to England only.
A district council cannot for the purpose of the Order extend its local area to bordering district councils.
Sharpe Pritchard advise local authorities and utilities on all manner of public procurement matters. Our experts are on hand to guide you through the intricacies of the procurement regime and to advise on any other procurement related issues. For more information, contact us today.
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