Councils are increasingly forging deals with smaller companies rather than big outsourcing contractors, according to the latest figures.
A report on public spending by market analysts Tussell in the wake of the collapse of construction giant Carillion shows five of local government's top 20 regular suppliers in 2018 were SMEs or social enterprises.
The amount of work being contracted out to the 20 biggest firms now stands at 25% of the total spent, after steadily declining since 2015 when it accounted for 30%.
Housing and leisure specialists Places for People has leapt to the top of the rankings for volume of local government spend after signing a joint venture with Surrey County Council worth £1.5bn over 15 years.
It is followed by Wates Group with £834m of spend and the French global construction firm Vinci SA which signed deals worth £214m.
Tussell's founder, Gus Tugendhat, said local government procurement was 'clearly moving in the right direction'.
He said: 'The proportion of value awarded to the top suppliers has been declining year-on-year, and it is great to see SMEs and social enterprises now making up a fifth of the top 20 suppliers to local government.
'We are hoping to work closely with local government buyers in 2019 to continue monitoring their progress towards social value goals in procurement, and to improve the quality of contracting data being published.'