THE REGIONAL INEQUALITY PROBLEM: LONDON RULES AND LOCAL EXCLUSION

How national frameworks exclude regional suppliers

The mechanisms of exclusion are not deliberate. They are structural. Each one is a reasonable risk management measure when viewed in isolation. Together, they create a procurement architecture that systematically favours national providers over regional specialists.

Turnover thresholds

National frameworks set minimum turnover requirements based on the aggregate lot value, not on the value of individual call offs. A regional FM provider with £8 million turnover may be perfectly capable of delivering a £2 million contract in their home region. But if the lot they need to be on has a £500 million ceiling and requires £50 million turnover, they are excluded before the evaluation begins. The threshold is set for the lot, not for the work. The regional supplier is filtered out by a number designed for national scale.

Insurance requirements

Frameworks mandate professional indemnity and public liability insurance at levels designed for the maximum risk exposure on the lot. £10 million or £20 million is standard. For a national provider with a multi billion pound revenue base, this is a routine overhead. For a regional specialist, the cost of increasing insurance cover to meet framework requirements, before a single contract is won, can be prohibitive. The insurance threshold is a compliance cost that acts as an entry fee to the framework. The fee is the same regardless of the value of work the supplier expects to win.

Case study requirements

Framework evaluations require case studies demonstrating delivery of similar services at similar scale in similar environments. A regional provider with an excellent track record across 50 local authority buildings in Yorkshire cannot demonstrate delivery of a 200 site national government estate. They have never had the opportunity. The case study requirement creates a feedback loop: you need national case studies to get on the national framework, and you need to be on the national framework to build national case studies. Regional suppliers are locked out by a capability test that measures past access, not future delivery.

The three structural filters that exclude regional suppliers from national frameworks: turnover thresholds set for the lot, insurance requirements set for maximum risk, and case study expectations set for national scale. Each is reasonable. Together, they are exclusionary.

The London design problem

National frameworks are designed by teams based in London or the South East. The default assumptions embedded in framework specifications, evaluation criteria, and lot structures reflect the operating environment those teams know best: large, complex, multi site estates in high cost urban areas. The framework specification becomes a template shaped by London operating conditions.

This creates misalignments across the country. Labour rates in the framework rate card are typically set to accommodate London and South East cost bases, with regional adjustments that may not reflect actual local market rates. Service specifications reference compliance standards and technology platforms that are standard in London government estates but may not be relevant or proportionate for a council building in Cumbria or a school in mid Wales. Mobilisation assumptions reflect the availability of a large, mobile workforce in the South East, not the recruitment realities of rural or post industrial areas where the FM labour market is thinner.

What regional exclusion costs

The buyer pays more

A national provider delivering an FM contract in a region where they have no existing operational base faces mobilisation costs, recruitment challenges, and supply chain inefficiencies that a local provider would not. These costs are embedded in the contract price. The buyer pays a premium for using a national framework that delivered a national provider when a regional provider could have delivered the same service at lower cost with better local knowledge.

The local economy loses

When FM contracts are awarded to national providers, the employment and supply chain benefits flow to the provider’s corporate structure rather than to the local economy. A regional provider based in the area would employ local people, use local subcontractors, and spend locally. A national provider may bring in management from their nearest regional hub and use their existing national supply chain. The social value commitments discussed in Article 7 are designed to mitigate this, but as that article demonstrated, the commitments are rarely tracked and the local impact is often minimal.

The irony compounds. In many cases, the national provider that won the framework contract subcontracts the operational delivery back to the regional firms it displaced, taking a management fee for the intermediation. The local buyer pays a national provider to manage local suppliers who could have been appointed directly. The framework model creates a circular economy where the regional market pays a middleman premium for work it was capable of delivering without the middleman.

Innovation is suppressed

Regional specialists often develop operational innovations tailored to their local market: workforce models adapted to local labour availability, maintenance approaches adapted to local building stock, client relationships built on proximity and responsiveness. These innovations are invisible to the national framework evaluation. They do not produce case studies at the scale the framework expects. They do not fit the response structures the evaluation rewards. The framework selects for standardisation, which excludes the diversity that produces innovation.

The PFI Reckoning series examined a related dynamic. As PFI contracts expire, the authorities that must reprocure FM services are often in regions where the local FM market has been suppressed for 25 years by the PFI structure. The regional providers who might have competed have not had the opportunity to build track records. The framework model compounds this by requiring track records the regional market has been structurally prevented from building.

The levelling up question

The UK government’s levelling up agenda explicitly aims to reduce regional inequality in economic opportunity. Procurement is identified as one of the levers for achieving this: public sector spending should support local economies, local employment, and local supply chains.

Framework procurement operates in tension with this objective. National frameworks consolidate spend in national providers. The framework lot structures, turnover thresholds, and evaluation criteria described in this article systematically direct work away from the regional suppliers that levelling up policy aims to support. The procurement mechanism and the policy objective are pulling in opposite directions.

Regional frameworks operated by bodies like ESPO and YPO partially address this. Their lot structures are more accessible. Their turnover thresholds are typically lower. Their evaluation criteria may be more receptive to regional case studies. But regional frameworks cover a smaller share of total public sector FM spend than national frameworks. And within regional frameworks, the same concentration patterns apply at a regional level: a small number of providers capture the majority of call off value.

What buyers and suppliers should do

For buyers

Before selecting a national framework for a regional requirement, assess whether the framework’s supplier panel includes providers with operational presence in your region. If it does not, consider whether a regional framework or an open tender would produce a better outcome. Request call off data showing the geographic distribution of awards on your chosen lot. If 80% of the call off value goes to providers based in London and the South East, the framework is not delivering regional competition.

For suppliers

If your strength is regional, focus on frameworks where your geography is an advantage rather than a disadvantage. Regional frameworks, dynamic purchasing systems, and open tenders allow you to compete on operational capability rather than balance sheet size. Build case studies that demonstrate the value of local knowledge, local workforce, and local supply chain. The market is moving toward outcome based evaluation, which favours providers who can evidence site specific delivery over providers who can evidence national bid factory capability.

The geography of exclusion

Regional inequality in FM procurement is not the result of bad intentions. It is the result of framework structures designed for national efficiency that produce regional exclusion as a side effect. The turnover thresholds, insurance requirements, case study expectations, and London centric specification assumptions create a procurement architecture that is structurally biased toward large national providers, even when the work is local, the estate is small, and the best operator is regional.

The next article examines the sector dimension of this problem: why FM procurement for NHS estates, education buildings, Blue Light facilities, and local government offices requires different framework approaches, and why one framework does not fit all.