Procurement and Local Government Reorganisation: what does it actually mean in practice?

Local Government Reorganisation (LGR) is progressing at pace with the Secretary of State selecting proposals to take forward LGR in Devolution Priority Programme (DPP) areas, and statutory consultation closing on 26 March 2026 for non- DPP areas. Public procurement is inevitably part of the picture. 

Contracts are expected to transfer by operation of law, or, where local authorities are subject to disaggregation by agreement following the process set out in Local Government (Structural Changes) (Transfer of Functions, Property, Rights and Liabilities) Regulations 2008/2176. The practical position, however, will depend on the final Structural Change Orders and on how authorities manage procurement during the transition. 

Section 24 Directions are likely to restrict (from the date set in the direction) existing local authorities from entering into the following contracts without the consent of the shadow authority: 

• capital contracts under which consideration payable exceeds £1m (or which includes a term allowing consideration payable by the authority to be varied); or  

• from entering into any non-capital contract under which the consideration payable by the relevant authority exceeds £100,000, where the period for the contract extends beyond the date specified in the direction (or that period may be extended beyond that date under the terms of the contract). 

For Authorities  

Authorities will still be able to procure, extend and modify contracts where the rules allow. But the wider context is changing. Procurement decisions are likely to be taken against a backdrop of service redesign and changes in scale or delivery and separate evolving funding arrangements. The timing for short term procurements will be key, as shadow authority consent may be required where a section 24 Direction has been issued.   

A key question will be whether to proceed with longer term procurements or rely on shorter arrangements. This often comes down to confidence in future priorities and funding. Where that is unclear, authorities may be more cautious about: 

• entering into long term commitments 

• fixing service models too early 

• limiting flexibility for a successor authority. 

Most contracts will transfer and can continue. The practical question is whether they still fit. 

• Does the scope work at a new geographic scale? 

• Does the pricing still make sense in a different funding environment? 

• Does the delivery model align with future operating models? 

In some cases, adjustment will be straightforward. In others, it may point towards modification or re-procurement. 

For bidders and suppliers 

For suppliers, LGR is likely to mean a less predictable pipeline in the short term. They may see: 

• procurements delayed or reshaped 

• contracts extended while authorities take stock 

• new opportunities emerging once structures settle. 

This should not mean less opportunity overall, but it does mean more uncertainty around timing and scope. Funding, cost pressures and service redesign will influence: 

• what is brought to market 

• how contracts are structured 

• the level of risk passed to suppliers. 

Understanding that context will be as important as tracking individual procurements. 

What about challenges? 

Where disputes arise, they are likely to focus on familiar issues: 

• contract extensions and modifications, particularly where scope or duration increases 

• use of interim arrangements, especially if relied on for longer than expected 

• decisions not to reprocure, where services have materially changed. 

What may change is how often these issues arise, as more contracts are revisited. 

For bidders, this means closer scrutiny of existing arrangements. For authorities, it reinforces the need for a consistent and transparent approach. 

The Birketts view 

LGR will affect how contracts are structured and delivered in practice, particularly as services are likely, over time, to move to a larger geographic scale in the case of former District Council functions and small geographical scale in relation to former County Council functions. That inevitably affects procurement and comes at a time when authorities are still bedding in the Procurement Act 2023.  

Such changes are likely to bring greater scrutiny, particularly where contracts are being extended or reshaped and bidders miss out.