Key considerations for local authorities navigating the 2026 below-threshold procurement reforms

The Local Government (Exclusion of Non‑commercial Considerations) (England) Order 2026 (the Order) came into force on 4 February 2026, giving local authorities a new ability to shape their below-threshold procurement markets in ways that were previously off-limits. For the first time since section 17 of the Local Government Act 1988 came into force, authorities are able to reserve certain low‑value competitions to local or UK‑based suppliers.

This change is designed to open up more opportunities for local businesses, SMEs and VCSEs and support local economic growth. Guidance has also been published to help authorities to understand how the Order interacts with the Procurement Act 2023 and the Procurement Regulations 2024. 

Here, Laura Keane explains what the Order does and how it works in practice and outlines practical considerations for authorities and suppliers.

What’s changing?

The Order applies to best value authorities and parish councils in England covered by the 1988 Act. It doesn’t apply to central government departments or arm’s‑length bodies which continue to operate under separate rules. For ‘relevant contracts’ that fall below the Procurement Act 2023 thresholds, authorities can reserve competitions either for UK‑wide suppliers or suppliers with substantive operations in a defined local area, with flexibility to include SME or VCSE‑only reservations.

For a single authority, ‘local area’ can be its own area or that area plus any bordering county or London borough. For joint authorities, it can cover the combined areas of the authorities and bordering counties or London boroughs. The definition is tied to the area in which the local authority primarily exercises its functions, with areas outside of the UK disregarded. 

Authorities must apply reservations proportionately and responsibly, ensuring that they don’t undermine competition or lead to inappropriate direct awards. Any use of location‑based reservations must be clearly disclosed in any below-threshold tender notices for contracts of £30,000 or above, as well as in any other advertisements for below‑threshold procurements. Authorities must keep records of decisions and may be scrutinised by the Procurement Review Unit, with failure to comply potentially exposing them to legal challenge. 

Practical considerations for local authorities

1. Application — the policy is option‑based. Authorities should make a case‑by‑case decision, weighing value for money, market health, competition and supply chain resilience. If reserving tenders locally, they must ensure that it fits the Order’s local area definition.
2. Coordination for joint procurements — where multiple authorities run a joint process, the authorities should align early on the combined local area and how eligibility will be evidenced at selection or award stages.
3. Transparency & record keeping — if a notifiable below‑threshold procurement is advertised, authorities must publish the below-threshold notice first on the central platform and state the reservation (and the defined local area, if relevant). Authorities should keep internal records of the reservation rationale and market assessment.

Practical considerations for suppliers

1. Opportunities for local SMEs & VCSEs — more below-threshold opportunities may be provided among local areas, potentially improving win‑rates for everyday works, goods and services.
2. The definition of ‘local’ will be policed — suppliers may need greater evidence to establish their local and substantive operations within the defined footprint area and out‑of‑area suppliers may be excluded from authority tender lists. 

Risk & governance considerations

1. Authorities must ensure that reservation decisions are proportionate and don’t unduly restrict competition, especially in markets with limited local supply.
2. The ‘local area’ definition must be applied consistently and supported by a clear internal interpretation to avoid misapplication.
3. Decision‑making should include a documented assessment of value for money, market health, competition levels and supply chain resilience.
4. Strong audit trails are essential, including rationale for each reservation, evidence of market analysis and compliance with Procurement Act notice requirements.
5. Clear notice wording must be used in below‑threshold tender notices to avoid transparency issues.
6. Good governance will reduce the risk of challenge and ensure that reservations support, not undermine, strategic procurement objectives.

Key takeaways

The Order gives local authorities a new and meaningful opportunity to strengthen local supply chains and support UK‑based businesses in a way that was previously off‑limits under section 17 of the Local Government Act 1988. 

Used well, it enables more targeted and socially responsive procurement for lower‑value contracts, provided that authorities update their internal policies and procurement templates to ensure compliance with the Procurement Act’s below‑threshold regime. For suppliers, particularly SMEs and organisations with a genuine local footprint, the changes may open up competitions that were previously dominated by larger national or international companies. 

Overall, the Order signals a shift towards a procurement environment that better reflects local economic priorities.

Talk to us 

With the Order now in force, local authorities should focus on applying the rules correctly, avoiding procedural missteps and ensuring that any reservations deliver genuine local benefits while remaining fully compliant with the Procurement Act 2023. Our procurement specialists can support you with the practical and governance challenges that come with operating under the new framework. We work with authorities across the UK to implement the Procurement Act 2023 in practice, design compliant below‑threshold processes, update internal policies and manage procurement risk.

Talk to us by sending an email to hello@brabners.com, calling 0333 004 4488 or completing the contact form below.