Open more council contracts to small and local firms, within the law

The problem and who is affected

Portsmouth City Council buys hundreds of services and works each year, from housing repairs to care and energy. Its public contract register does not show where suppliers are based or how big they are, so nobody can yet measure how much reaches small or local firms. Some lets are very large: the three housing repairs lots awarded in October 2026 each drew three bids and all went to one firm. The highways PFI, the largest annual contract listed, ends in March 2030 and its replacement is still being designed.

Who is affected: Small firms, charities and social enterprises that could supply the council; residents who rely on the services bought; council staff who run tenders and manage contracts; and council-tax payers, who gain from stronger competition and pay for any extra cost of smaller contracts.

What this would change

Aim: Give capable small and local suppliers a fair chance to bid and win council work, increase competition, and protect value for money and legal compliance, while publishing data good enough to judge the result.

What success would mean: Proposed measures, not agreed targets: more bids per competition; a rising share of contracts and spend with small firms and voluntary organisations; suppliers using a published forward pipeline; and data that separates where suppliers are registered from local jobs and local supply-chain spend. No numeric target is proposed until a baseline exists.

1) Publish a cleaner contracts dataset with start dates, values on one basis, and small-firm and voluntary-sector flags, as the Transparency Code asks. 2) Extend the published pipeline to contracts below the £2 million legal minimum. 3) For each large let, publish the lots decision and consider limiting how many lots one supplier can win. 4) Use the 2026 Order to reserve suitable contracts below the legal thresholds to local or small suppliers, case by case. 5) Hold supplier briefings before major lets, starting with post-2030 highways services. 6) Report bids, winners and social value delivered each year.

Proposed lead: Portsmouth City Council procurement and contract management (proposed; not agreed). Partners: Council service commissioners (housing, highways, adult and children's services), Local business and voluntary-sector support bodies (not yet identified or approached), Main contractors on large council contracts, Council legal services.

Powers: The council is the contracting authority for its own contracts. The Procurement Act 2023 requires it to consider lots before each tender (s.18), allows a cap on lots per supplier (s.23(4)), and requires regard to small-firm barriers (s.12(4), s.86). Since 4 February 2026 English councils may reserve competitions below the Act's thresholds to UK or local-area suppliers (SI 2026/94), and could already reserve them to small firms or voluntary organisations. Above threshold, contractor location remains a non-commercial matter under s.17(5)(e) of the Local Government Act 1988, so local preference is not lawful there. Award criteria must relate to the contract (s.23(2)). Legal advice is needed before any criterion refers to location or local employment.

Options

• Current approach: Current approach. Contract procedure rules in force since April 2025, a 2021 Social Value Policy, a signed small-business concordat, pipeline notices for some large lets and lots used in some procurements. The public register lacks supplier size and location, so results cannot be checked.
• Proposed response: Pipeline, lots and data first. Publish a fuller contracts dataset and a longer pipeline, record each lots decision, consider caps on lots per supplier, and brief suppliers early. Low legal risk; uses existing duties; benefits depend on firms responding.
• Alternative: Reserve suitable below-threshold contracts. Use the 2026 Order and existing discretion to reserve some competitions under the thresholds to local-area suppliers, small firms or voluntary organisations, where a competitive local market exists. Must still deliver value and competition.
• Alternative: Supply-chain transparency on large contracts. Ask main contractors to advertise subcontract opportunities openly and report subcontract spend and prompt payment, without location quotas. Needs legal advice on how far such terms can go.
• Alternative: Do minimum. Comply with the Act's notices and duties only. No extra cost, but no way to tell whether small or local firms are being shut out.

Market analysis for each major let may show that larger contracts give better value, or that few local firms can deliver. Legal advice may narrow what supply-chain terms are allowed. The council's own costs of running more, smaller contracts are unknown. Any of these could change the preferred mix.

Delivery plan

A first practical step: Write to the council asking it to publish the contracts extract released under FOI2026/02585 as open data, and whether its register can show supplier size and start dates. This needs no council decision to send.

Costs and funding

One-off costs

Not costed. Data cleaning, legal advice and pilot design would need staff time.

Recurring costs

Not costed. More, smaller contracts may raise tendering and contract-management workload, and may change unit prices either way.

Capital or revenue

Revenue (staff time); no capital element identified.

Funding status

No funding identified or committed.

Affordability

Unknown. The council's own budget pressures apply; the earlier claim that no new funding is needed has no evidence and is withdrawn.

Costing still needed

Estimate officer hours per tender and per managed contract for current and lotted approaches; sample past lets to compare bids and prices; cost the data changes with the register supplier.

Benefits, risks and trade-offs

Possible benefits: Possible benefits, not forecasts: more competition, more chances for small and local firms, and better public data on where council money goes. Any effect on local jobs is unmeasured and should not be assumed.

Risks:

• Smaller lots can raise unit costs or management workload and reduce value for money.
• Reserving competitions where few local firms exist can weaken competition.
• A registered local address is not proof of local jobs; a 'letterbox' office could meet a location test.
• Legal challenge if location is used above threshold or criteria do not relate to the contract.
• Data improvements depend on the register supplier and officer time.

Who could gain or lose: Small local firms, social enterprises and their workers could gain. Larger firms and suppliers outside the area could lose some opportunities below threshold. If unit costs rise, service budgets carry the cost. Benefits may not reach the most deprived neighbourhoods unless measured.

Capacity: Depends on the size of the council's procurement and contract-management teams, which was not established. The PFI exit programme already has a dedicated team, which shows demand on scarce commercial staff.

How to judge progress

Reassess when: When the Spring 2027 highways options paper is published, when the council's next pipeline notice appears, or if open contract data allow the local-supplier baseline to be rebuilt.

Where things stand

What is known:

• The public register lists 2,231 records but no supplier size or location.
• The highways PFI ends on 31 March 2030; an options paper is planned for Spring 2027.
• Housing repairs were re-let in three lots in October 2026, all to one supplier, with three bids per lot.
• Councils may now reserve below-threshold competitions to local-area or UK suppliers, and to small firms or voluntary organisations.
• Above threshold, contractor location cannot lawfully be used as a preference.

What is not known:

• How much council spend reaches small, local or voluntary suppliers.
• The value of contracts below the thresholds that could be reserved.
• The full text of the council's 2025 contract procedure rules.
• Whether the council reports social value delivered under its 2021 policy.
• The cost of managing more, smaller contracts.

Decisions needed:

• Whether the council will publish an open contracts dataset with supplier size and start dates.
• Whether and where to use below-threshold reservations, and how to define the local area.
• How post-2030 highways services will be procured, including any lots.

Existing work:

• Contract procedure rules (Part 3A of the constitution): In force since 1 April 2025 (as of 2026-11-02).
• Social Value Policy: Published March 2021; delivery reporting not established (as of 2026-11-02).
• Small Business Concordat: Signed; voluntary code (as of 2026-11-02).
• Housing and corporate repairs term contracts: Awarded 16 October 2026 in three lots; start 1 April 2027 (as of 2026-11-02).
• PFI Expiry and Future Services programme (highways): Approach endorsed by Cabinet 27 October 2026; options paper planned Spring 2027 (as of 2026-11-02).

UK Facts context: Public procurement (National context on UK public procurement. National law and policy; individual council contract decisions are local.)

Next review: When Portsmouth City Council publishes the Spring 2027 Cabinet options paper on post-2030 highways services, or its next Procurement Act pipeline notice, whichever comes first.. Evidence last checked 2026-11-02.

Sources

Where earlier ideas went

• contract-lotting-smes (earlier ten suggestions): restored. local-procurement (whole action) Not carried forward: All FOI2026/02585 figures (£414.6m, 2,326 contracts, £71.8m and 17.3% local, area bands, category shares, 'nearer 11%', £212m expiry, £147.1m construction); 'PFI locked until 2032' (corrected to 31 March 2030); £25.3m Ensign figure (register says £25.0m); required local subcontract share (legal risk above threshold); 'lots for firms of 10 to 50 staff' and 'lots under £2m' targets; 'low hundreds of thousands' cost and 'no new funding required' (no origin); named Solent Chamber of Commerce partner (not verified or approached).