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

The value of contracts awarded by local government have returned to trend, following a dip in the previous quarter, according to procurement analysts at Tussell.

Tussell found that in Q3, over 6,000 contracts, worth a combined £8bn were awarded by local government. This value is up 67% from the previous quarter, and back towards trend which is an average of £8.3bn. The contract volume, however, remains steady. This indicates that local government awarded a higher average contract value this quarter.

The market

Led by Coventry City Council, West Midlands was the region with the largest total award value for Q3, totalling £2.6bn, almost double the spend of the next region (London at £1.3bn). This was driven by a £2bn contract awarded by Coventry City Council to E.ON, making them the council’s strategic energy partner, helping assist and deliver the ‘One Coventry Plan’ over the next 15 years. This energy partnership is the first of its kind in the UK, making it E.ON’s highest value contract in the public sector.

Surrey County Council awarded the highest volume of contracts in the quarter, at 556. A huge volume (538) of these were awarded under a DPS for the Provision of Client Assisted Passenger Transport Service for Vulnerable Children and Adults.

E.ON is the top supplier by award value, winning seven awards in the last quarter across five different contracting authorities, highlighting their strong relationship with the public sector. Veolia is second, driven by a contract award of £796m for waste collection cleaning and ancillary services with Westminster city council. Mace was awarded the highest number of contracts across the top 10 suppliers (8), the largest of which was a contract worth £200m for the provision of Hard FM services to Surrey County Council.

Sectors

The top five sectors have all risen in total contract award value compared to Q2. Construction and environmental sciences had the highest total contract award values, at £1.4bn each for Q3.

Construction has continued to be a consistently high value sector. Notably, £322m was awarded to Far East Consortium International Limited by Greater Manchester for a property development project lasting 10 years. Environmental services grew 420% by total contract award value compared to Q2. This was driven by high value contracts award such as Westminster’s waste services contract to Veolia (£796m) and West Sussex County Council’s award to West Sussex Britaniacrest Seneca Partnership Limited for refuse derived fuel collection, transport and treatment services (£396m).

Health and Social Care, which were the second biggest sector in the previous quarter, was up by £329m. Transport was the only new sector to the top five in Q3 and had the highest volume of awards (2259) compared to the other four sectors. Almost half of these contract awards (1,087) were awarded by Suffolk and Surrey County Council for passenger transport services.

Frameworks

Despite increases in total contract award value, framework awards have dropped from Q2 2023 by four percentage points. Out of the top 10 contracts awarded in this quarter only one was awarded via a framework, which may explain why there has been a slight drop in call-off value.

Top Frameworks

The YPO’s Managing Temporary & Permanent recruitment was the framework with the highest value call-off this quarter, awarded by Birmingham City Council to Hays for £328m. 531 calls offs were awarded through the DPS for the supply of Passenger Transport Services. All of these were by Suffolk County Council. The remaining top three frameworks were centred around gas supply, electricity supply and vehicle charging infrastructure solutions.

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.