UK public procurement: Can you prioritise British suppliers?

The UK Government often speaks of its desire to promote British business. One obvious way it could try and do so is by giving British businesses a greater share of the roughly £350 billion of goods and services it buys every year.

The Government recently expressed its desire to ensure that public procurement helps foster “a resilient economy that supports British businesses and local communities”. But the UK has signed up to international obligations that limit its freedom to do so.

What does the law say?

The Procurement Act 2023 (the Act) allows for tenders submitted by suppliers who are not from the UK or a “treaty state supplier” to be excluded.

If a supplier is from the UK or a “treaty state supplier”, you cannot exclude them or discriminate against them – regardless of any public or political pressure to do so. Within these legal parameters, contracting authorities still have discretion in designing and running procurements.

A “treaty state” is a country that has signed up to certain international agreements set out in the Act. The list is regularly updated, but as of the date of this article, these countries are (in alphabetical order):

Albania, Antigua and Barbuda, Armenia, Aruba, Australia, Bahamas, Barbados, Belize, Brunei, Canada, Chile, Colombia, Costa Rica, Dominica, Dominican Republic, Ecuador, El Salvador, EU member states, Georgia, Grenada, Guatemala, Guyana, Honduras, Hong Kong, Iceland, India, Iraq, Israel, Japan, Kazakhstan, Kosovo, Liechtenstein, Malaysia, Mexico, Moldova, Montenegro, New Zealand, Nicaragua, North Macedonia, Norway, Panama, Peru, Saint Christopher and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Serbia, Singapore, South Korea, Suriname, Switzerland, Taiwan, Trinidad and Tobago, Ukraine, USA, and Vietnam.

What is a treaty state supplier?

A treaty state supplier is a supplier who is entitled to benefit from the international agreements which the above countries have signed up to. Usually, that will mean a supplier who is set up in or based in those countries, but the exact definition could vary depending on the agreement that the treaty state has signed up to.

A “treaty state supplier” must be treated on an equal footing with UK suppliers and have access to the same remedies, including the ability to challenge procurement decisions in the UK courts.

In reality, the test is a bit more complex than this – for example, the law also prohibits discrimination against suppliers on the basis of their association with one of these countries, and there may be some circumstances where only particular sectors are covered by an international agreement. That’s why it’s best to get specific legal advice before relying on this.

What about non-treaty state suppliers?

You are allowed to disregard tenders from non-UK and non-treaty state suppliers (for open procedures) or to exclude such suppliers from the procurement (for a competitive flexible procedure). However, Cabinet Office guidance asks you to “think carefully before doing so” for competition and value for money reasons. One reason why you might wish to do so is if you had good grounds that a particular non-treaty state supplier would not be able to deliver what the contract requires.

Public bodies only owe duties to UK or treaty state suppliers under the Act. This means non-treaty state suppliers are not entitled to the remedies set out there. The only way they could challenge a decision to exclude them would be through judicial review, which is usually harder to succeed in. Even if you opted to allow a non-treaty state supplier to participate in a procurement, they would not be able to challenge anything you did using the remedies in the Act.

It would therefore be possible to specify in a tender notice that tenders will be disregarded from certain non-treaty states, or from any supplier that is not from a treaty state. Any objections to doing so would be based on economic and political, rather than legal, grounds.

A potential loophole could arise where a non-treaty state supplier sets up a subsidiary in the UK and then tried to argue it was a “United Kingdom supplier”, such that its tender should not be excluded. The Act defines a “United Kingdom supplier” as someone “established in, or controlled or mainly funded from, the UK”. One interpretation of this is a UK subsidiary is “established in” the UK, so setting one up and bidding in its name would be enough for a non-treaty state supplier to ensure its tender was not excluded.

That would seem an odd result. We are not aware of any case law to clarify this point, and there is a good chance that such a tactic would not succeed if tested in court. Cabinet Office guidance (written in the context of Russia and Belarus) itself seems uncertain on this point, advising contracting authorities to “consider the specific circumstances and take legal advice where appropriate” where there is a UK supplier controlled from Russia or Belarus.

Below-threshold contracts

The obligation not to discriminate against treaty state suppliers doesn’t apply to below-threshold contracts (which currently includes, for example, contracts for goods or services by a UK central government department valued at under £135,018). Contracts below that threshold can be reserved to, for example, UK suppliers only or even a particular region of the UK.

An exception to this is for EU suppliers which are “established in” the UK, because the UK-EU trade agreement extends the obligation not to discriminate against such suppliers in respect of all contracts. But as discussed above, in many cases an EU supplier established in the UK might be treated as a UK supplier anyway.

For example: if a central government department wanted to award a £100,000 contract to supply UK-branded stationery at a trade fair to advertise British business, it would be permitted to restrict the contract to UK suppliers only (and to EU suppliers established in the UK). But if the contract was for £150,000, it could not do so – it would need to treat UK and treaty state suppliers the same. This would be the case even though it might be politically controversial to have a non-UK supplier manufacturing products for a British trade event.

The discretionary national security exclusion ground

In some procurements, public bodies may wish to exclude certain foreign suppliers if they feel awarding the contract to them could pose a threat to national security.

The Act allows you to exclude a supplier from a procurement where you determine that they (or someone connected to them) pose a “threat to the national security of the UK”. Suppliers should be given a chance to make representations before this is used and for some bodies Cabinet Office Ministerial approval is required.

This can apply whether or not a supplier is a UK or treaty state supplier. Where it does apply, the decision to exclude a supplier is not on the basis that they are not from a treaty state, but because the supplier themself is deemed to pose a national security threat. The analysis will therefore need to be individually tailored to that supplier.

Conclusion

The list of “treaty states” is constantly evolving as the UK negotiates more trade agreements, but we can predict that certain countries are likely to remain non-treaty states, making it permissible to disregard tenders from their suppliers.

To date, we have rarely seen procurements excluding suppliers based on them being from non-treaty states. However, this is a question that is increasingly raised with us and could become a greater part of commercial strategies for more sensitive procurements in future. The ability to do so should be used with caution, but it could come in useful, alongside the discretionary exclusion ground for national security, in allowing for public bodies to disregard or exclude tenders where there are other interests at stake.  

If you wanted to run a procurement that excludes non-treaty state suppliers, you should consider whether you have a good reason to do so, and seek up-to-date advice on which countries are treaty states under the Act.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2026.  For more information see our terms & conditions.