From 4 February 2026, local authorities in England can lawfully reserve certain below‑threshold procurements either to UK‑based suppliers or to businesses based in a defined local area. The change arrives via the Local Government (Exclusion of Non‑commercial Considerations) (England) Order 2026, which disapplies the usual ban in section 17(5)(e) of the Local Government Act 1988 for these smaller buys. (legislation.gov.uk)

The Order applies to best value authorities and parish councils in England and only to “below‑threshold contracts” under the Procurement Act 2023. In practical terms, think of the everyday works, goods and services that fall under publication thresholds for the main regime. Authorities now have two options before inviting tenders: reserve to UK‑based suppliers, or reserve to suppliers “based within” a local area. (legislation.gov.uk)

“Based within” means a supplier is genuinely established or has substantive operations in the place claimed; where the parent company sits is irrelevant. For SMEs with a local office, depot or staffed site, that can be enough to qualify, even if corporate ownership is elsewhere. Expect councils to look for evidence such as premises, payroll and delivery capability within the stated area. (legislation.gov.uk)

Local area has a clear definition baked into the Order. A single authority can set it as its own boundary or that boundary plus any bordering counties or London boroughs. If the authority sits entirely inside one county or London borough, it may choose either its own area or that whole county/borough. Joint procurements can define the area as the combined participating authorities’ areas, with the same option to include bordering counties or London boroughs. (legislation.gov.uk)

Transparency is mandatory. If a contract is a “notifiable below‑threshold contract” (generally £30,000+ for local authorities), councils must publish a below‑threshold tender notice and state whether it is reserved to UK suppliers or to the specified local area; other relevant contracts must carry the same information in the advert. Regulation 24(2) of the Procurement Regulations 2024 has been updated to require these disclosures in the notice. (legislation.gov.uk)

What changes on the ground? First, you’ll start seeing explicit reservation language in notices. Second, a local reservation can narrow the field to firms with a credible footprint in the chosen area, promoting shorter supply lines and quicker response times. Third, UK‑only reservations give micro‑firms comfort that they won’t be competing with overseas suppliers for small buys that are not subject to international procurement obligations. The government’s guidance anticipates these use‑cases and sets out compliance guardrails. (gov.uk)

Case study: a parish council planning a £65,000 playground refurbishment sets the local area as the district boundary and reserves the competition accordingly. Three small contractors with depots in the district bid; two larger contractors headquartered elsewhere are eligible because they maintain staffed local yards. The notice makes the reservation explicit and specifies the area, helping bidders self‑select quickly. (legislation.gov.uk)

Case study: two neighbouring authorities run a joint £240,000 highways patching contract. They define the local area as both council areas plus bordering counties, widening the pool while still prioritising proximity for 2‑hour call‑outs. Suppliers demonstrate “substantive operations” with evidence of local crews and plant. The reservation is set out in the below‑threshold tender notice. (legislation.gov.uk)

Case study: a district council buys £90,000 of end‑user IT support and reserves to UK‑based suppliers. A firm with a Newcastle service desk and a parent registered in Dublin remains eligible because corporate ownership location doesn’t count-what matters is where operations are based. The notice flags the UK‑only reservation and standard time limits for bids. (legislation.gov.uk)

For SMEs, the immediate to‑do list is straightforward: read the reservation line in every below‑threshold tender notice; check whether you sit inside the stated area or can evidence a staffed site there; and, if you qualify, be ready to reference your local operations clearly in selection answers. Where the line is fuzzy, use clarification windows to ask what the buyer will accept as proof of being “based within” the area. (legislation.gov.uk)

A note of caution. Reservations reduce geographic competition by design. Authorities still need value for money, non‑discrimination between eligible bidders and a defensible rationale for choosing UK‑only or a particular local area. If a reservation looks mis‑specified or overly narrow, suppliers can challenge through the clarification process and, if needed, through formal routes. The published guidance emphasises safeguards to remain within the law. (gov.uk)

Timeline and context. The draft Order was laid in Parliament on 2 December 2025 and is now in force, with councils expected to start using the new fields in notices immediately. Expect a bedding‑in period as standard templates are updated across procurement portals. (statutoryinstruments.parliament.uk)