Public procurement experts and LocalGov partners, Tussell, have analysed the local government procurement market for the second quarter of this year.

The value of contracts awarded by local government remains at historic low levels, according to procurement analysts Tussell.

Tussell found that in Q2, CRH – a multinational building materials firm – earned the highest-value contracts of the quarter via its subsidiaries. Meanwhile, recreation gained a lot of market share as a sector following a large contract awarded by Waverly Borough Council. Drug and Alcohol rehabilitation was the key topic of concern within health and social care, while London saw poor SME procurement performance.

The market

Last quarter, local government awarded £3.25bn worth of contracts: nearly half the value of the previous quarter.

Contracting authorities in the North West awarded the most in contract value, totalling at £510m collectively. This was driven by an £168m contract awarded by Halton Borough Council (this quarter’s largest buyer) to Tarmac Trading, a CRH subsidiary, for the provision for Highways Maintenance Services. This contract reflects a continuation of an already long-standing relationship between this buyer and supplier, with Tarmac having previously won a similar 6-year contract in 2013.

CRH as a parent organisation has a strong presence in the local government procurement market, with J.B. Riney & Co., another CRH subsidiary, winning the fourth largest contract of the quarter: another highways services contract for the London Borough of Tower Hamlets. Since 2012, CRH has won over £3bn through local government contracts, the largest of these being a £480m highways services contract with Norfolk County Council in 2013.

With construction contracts accounting for 37% of market value last quarter, it is clearly a high-value sector. Highways maintenance contracts – such as the one won by CRH – have been particularly prominent. This can also be seen through the tender notice published this quarter by the Royal Borough of Windsor & Maidenhead for a 4-lot contract to provide highways services. The goal of the contract is to ensure maximum cost efficiency and sustainability through collaboration between suppliers across lots.

Other Suppliers

Whilst CRH was last quarter’s largest supplier, Humankind and Willmott Dixon have shown persistent presence within the market. Both have remained in the top 10 suppliers by award value since Q1 2023.

Humankind won its second largest contract with local government: a £103m contract with Sheffield City Council for an adult substance abuse service. The other top healthcare providers this quarter, the Framework Housing Association and Change, Grow, Live, also provide services relating to alcohol and drug rehabilitation.

Sports and Leisure Management were another prominent supplier, winning the second largest contract last quarter. This £166m contract was awarded by Waverly Borough Council for maintenance and operations of four leisure centres, as well as the delivery of a new ‘Active Communities’ Programme. The aim of this service is to improve facilities and in turn increase social value within the borough. West Berkshire Council also awarded a similar contract to the same supplier valued at £1.5m.

London based local authorities performed the worst this quarter in terms of awarding contracting to SMEs. Only 11% of total contract award value (£37m) went to SMEs from these authorities.

In contrast, the West Midlands saw 51% of its total contract award value go to SMEs. Scottish authorities awarded the most in absolute terms to SMEs, at £147m. The most successful of these is Levenseat, a recycling firm, who won a £25m contract with Glasgow City Council. This relationship reflects a trend within the local government procurement market of increased focus on the promotion of environmental goals and improved social value. More and more regularly, the top earning SMEs focus on these objectives, such as Levenseat, Capital and Centric Property Developers and the National Energy Foundation.

This analysis was compiled by Tussell – the market’s trusted source of insight into UK public procurement. To learn how Tussell’s market intelligence platform can help you to make smarter, more cost-effective procurement decisions, visit our website.