“Buy British” and tensions with UK procurement rules

The UK prime minister has promised to preside over a step change in approach to public procurement, finding ways to direct more of the £400bn in annual procurement spend to supporting British businesses and British jobs. 

In the words of Liam Byrne, Labour Chair of the Business, Innovation, Science and Trade Committee: “Public procurement is the great lever of industrial policy we haven’t yet pulled. After years of warm words, we now need to see whether the rhetoric finally gets translated into real contracts that deliver British jobs, skills and industrial capacity”. 

Successive governments have tried to pull this lever, with varying degrees of success.  Key to achieving these policy objectives is navigating the obvious tensions with UK procurement rules, which are based on principles of equal treatment and non-discrimination in line with the UK’s international treaty obligations.

Tensions with UK procurement rules

The previous Conservative administration tried to pull this lever in the context of UK subsidy rules, including by inserting local UK content requirements into eligibility for Contracts for Difference (“CfD”) supporting renewable energy projects.  When assessing the CfD bids, the UK government was looking to apply a local content criterion to determine eligibility, incentivising operators to favour UK content in their applications, to the detriment of imported inputs.  The EU considered this to be a breach of the WTO’s non-discrimination principle, which prohibits WTO members from discriminating against imports in favour of domestic products and threatened the UK with a complaint to the WTO, with the UK having then to backtrack. 

Social value

In the UK, local content requirements tend to come under the broad umbrella of “social value”. The UK government has updated its policy in this area recently, now requiring that social value is weighted at a minimum of 20% for central government contracts valued over £5 million: Procurement Policy Notice 026: The Social Value Model (“PPN 026”). Updated guidance on applying the “Social Value Model”, which will prioritise “British jobs, skills, and opportunities” is expected in Autumn 2026. 

From 1 January 2027, most central government authorities in the UK are required to apply PPN 026 to above threshold procurements with a value of over £1 million.  Tender documents will have to incorporate one of two outcomes from the Social Value Model and associated criteria.  The relevant outcomes focus on creating or retaining high-quality UK jobs with fair pay and working conditions or supporting training and retraining, enabling progression in work, and developing talent pipelines. 

However, PPN 026 also states the criteria must relate to the subject matter and be proportionate, in other words recognising that authorities must not impose unnecessary burdens on suppliers, create barriers to participation, or discriminate against suppliers entitled to equal treatment.  

Legal precedents

Whilst the government has stopped short of imposing mandatory local content requirements, attempts to steer public contracts towards British businesses through social value criteria are not without legal risk.  Two recent cases help to highlight the pinch points. 

• R (Cornwall Council) v Secretary of State for Housing, Communities, and Local Government [2026] EWHC 1805 (Admin)

In this case, the Secretary of State clawed back over £2.12 million in ERDF funding awarded to Cornwall Council following an audit which identified irregularities.  The relevant irregularity here concerned a competitive tender for a project management framework.  The invitation to tender required tenderers to identify any services they intended to provide through a sub-contractor.  For each service to be provided by a sub-contractor, the tenderer was to identify two sub-contractors, one of whom had to be a Cornish SME.  The Secretary of State determined that this was discriminatory and breached the principle of equal treatment.  Cornwall Council sought judicial review of the clawback. 

The Court upheld the Secretary of State’s position.  This is because whilst the requirement did not expressly exclude non-Cornish companies, it placed businesses with local networks, who were overwhelmingly likely to be based in the UK, at an advantage, and this was therefore indirectly discriminatory. 

• Ecolog International FZE v Secretary of State for Defence [2026] EWHC 2154 (TCC)

In this case, Ecolog, a company established in the UAE, challenged the award of a contract by the MoD for facilities management services at British bases.  The procurement was regulated by the Defence and Security Public Contracts Regulations 2011 (“DSPCR”) (now repealed).  Ecolog, however, was not a treaty state supplier afforded the same market access rights as domestic UK suppliers, and this point was used as part of the MoD’s defence to the claim. 

The Court upheld the MoD’s position, adding that whilst there was a limited implied tender contract, this only required the MoD to consider Ecolog’s bid in good faith, and nothing more.  Under DSPCR, suppliers from countries without reciprocal agreements are not afforded protection against unequal treatment and discrimination. 

Specific exemptions for defence and security procurement

This second case also highlights one area of procurement where the UK government has greater ability to pursue “Buy British” policies.  As was the case under the DSPCR and now under the new Procurement Act 2023, the MoD and other UK contracting authorities can invoke national security exemptions to both direct award defence and security related contracts and to restrict them to UK suppliers (although this exemption was not invoked in the procurement that was the object of Ecolog litigation). 

We have in fact seen this recently with the announcement that work on a £6bn plan to build three new floating docks at the Royal Navy’s submarine base on the Clyde in Scotland will be carried out by British firms with a “UK-only” competition.  The point was emphasised that by backing British shipyards, the MoD will not only boosting national security but also securing resilience in the industries that will drive growth today while building the capabilities the country needs for the future.

For more on the application of these policies in a public procurement context, please contact one of the CMS Antitrust, Competition & Trade team.