Q3 saw total contract award value by local government authorities plateau, remaining at around £4.1bn. This steady contract value comes after a year of steady decline, seeing total value roughly half since Q3 last year.
Whilst overall contract award value has remained steady, we have seen a big shift in the distribution of contracts across sectors. The construction sector has grown, maintaining its position as the largest sector for local government procurement with an extra £500m of construction contracts being awarded, increasing the share of award value this sector holds to 46% of all local government contracts.
Health and social services have seen a steady contract value since the previous quarter, maintaining a 20% market share. Comparatively, one sector that has seen a large increase in contract award value is the transport sector, now making up 8% of the market.
This has been driven by a surge in bus and taxi services contracts awarded under Dynamic Purchasing Systems and Frameworks, such as the Carmarthenshire DPS for the Provision of Bus and Taxi Services and the Dynamic Purchasing System for SEND One Provider Home to School Transport Contracts. The latter DPS was awarded by Lincolnshire County Council and equated to approximately £20m in this quarter. As the 3rd largest buyer of the quarter, Lincolnshire County Council awarded roughly 33% of its contracts within the transport sector, driven by this Dynamic Purchasing System. Contracts awarded under this DPS go to taxi and bus services to undertake all transport requirements to selected Special Educational Needs and Disabilities schools in Lincolnshire.
Cross regional analysis this quarter saw the contracting authorities in Scotland, Wales and Northern Ireland continuing to exhibit high levels of locally awarded contracts, with all of them awarding over 60% of their total contract award value to local suppliers.
London remained the second largest supplier region but saw more of this value resulting from local procurement and procurement from the East of England. One of the largest contracts awarded this quarter by a London based local authority to a supplier in the East of England and the South East was an £18m contract for electrical fire safety in large blocks and street properties.
This quarter exhibited a large outlier as reflected by the darkest square within the heat map, this is a £500m contract awarded jointly by West Northamptonshire County Council and North Northamptonshire County Council for the provision of highways network infrastructure maintenance and management services split between the two authorities.
This large contract made West and North Northamptonshire County Councils the largest contracting authorities of the quarter and Kier Highways the largest supplier. This was Kier’s largest ever contract with a local government authority and West Northamptonshire’s first highways related contract. This large contract will aim to improve highway infrastructure, and, whilst being awarded to a large construction company, hopes to bring increased opportunities for SMEs through the supply chain procurement process and increase opportunities for locals by providing employment opportunities over the seven year contract, with the possibility to extend to 14 years.
Key Sector: Cost of living and fuel poverty
Another interesting contract to highlight was awarded by Leeds County Council. One of the largest construction contracts of the quarter was their contract for their ‘Clustering for Warmth’ programme. This is the 5th contract of the programme, putting the total value at £45m. The programme aims to provide residents in several council-owned tower blocks with improved heating and hot water systems to improve energy efficiency and lower carbon emissions.
This contract is the largest contract ever awarded to Cenergist Limited, an SME based near Newcastle that specialises in Carbon and Water Efficiency Solutions. This contract perhaps reflects an emerging pattern by Local Government as they aim to increase spending with SMEs. We are also seeing several contracts awarded to help increase energy efficiency of households as we go into the winter, helping to prevent ‘fuel poverty’ and combat the emerging cost of living crisis.
Other examples of contracts from this quarter aimed at tackling similar issues include Nottingham City Whole House Retrofit Energy Efficiency Installations awarded under the Energy Efficient Retrofit Installers DPS, South Cambridgeshire District Council’s “Warm Hubs” contract and Liverpool City’s “Low Carbon Skills Support Fund”.
This article was written by Tussell for LocalGov
