diff --git a/workspaces/libnpmexec/lib/index.js b/workspaces/libnpmexec/lib/index.js
index 7a224ab7f0a62..575f8e6ea4a5e 100644
--- a/workspaces/libnpmexec/lib/index.js
+++ b/workspaces/libnpmexec/lib/index.js
@@ -79,7 +79,6 @@ const exec = async (opts) => {
   const {
     args = [],
     call = '',
-    color = false,
     localBin = resolve('./node_modules/.bin'),
     locationMsg = undefined,
     globalBin = '',
@@ -97,7 +96,6 @@ const exec = async (opts) => {
   const run = () => runScript({
     args,
     call,
-    color,
     flatOptions,
     locationMsg,
     output,
@@ -114,20 +112,36 @@ const exec = async (opts) => {
 
   const needPackageCommandSwap = (args.length > 0) && (packages.length === 0)
   // If they asked for a command w/o specifying a package, see if there is a
-  // bin that directly matches that name either globally or in the local tree.
+  // bin that directly matches that name:
+  // - in the local package itself
+  // - in the local tree
+  // - globally
   if (needPackageCommandSwap) {
-    const dir = dirname(dirname(localBin))
-    const localBinPath = await localFileExists(dir, args[0], '/')
-    if (localBinPath) {
-      binPaths.push(localBinPath)
-      return await run()
-    } else if (globalPath && await fileExists(`${globalBin}/${args[0]}`)) {
-      binPaths.push(globalBin)
-      return await run()
+    let localManifest
+    try {
+      localManifest = await pacote.manifest(path, flatOptions)
+    } catch {
+      // no local package.json? no problem, move one.
+    }
+    if (localManifest?.bin?.[args[0]]) {
+      // we have to install the local package into the npx cache so that its
+      // bin links get set up
+      packages.push(path)
+      yes = true
+      flatOptions.installLinks = false
+    } else {
+      const dir = dirname(dirname(localBin))
+      const localBinPath = await localFileExists(dir, args[0], '/')
+      if (localBinPath) {
+        binPaths.push(localBinPath)
+        return await run()
+      } else if (globalPath && await fileExists(`${globalBin}/${args[0]}`)) {
+        binPaths.push(globalBin)
+        return await run()
+      }
+      // We swap out args[0] with the bin from the manifest later
+      packages.push(args[0])
     }
-
-    // We swap out args[0] with the bin from the manifest later
-    packages.push(args[0])
   }
 
   // Resolve any directory specs so that the npx directory is unique to the
diff --git a/workspaces/libnpmexec/lib/run-script.js b/workspaces/libnpmexec/lib/run-script.js
index b34895c824e6d..2f7b258345faa 100644
--- a/workspaces/libnpmexec/lib/run-script.js
+++ b/workspaces/libnpmexec/lib/run-script.js
@@ -15,7 +15,6 @@ const nocolor = {
 const run = async ({
   args,
   call,
-  color,
   flatOptions,
   locationMsg,
   output = () => {},
@@ -26,6 +25,7 @@ const run = async ({
 }) => {
   // turn list of args into command string
   const script = call || args.shift() || scriptShell
+  const color = !!flatOptions.color
   const colorize = color ? chalk : nocolor
 
   // do the fakey runScript dance
diff --git a/workspaces/libnpmexec/test/index.js b/workspaces/libnpmexec/test/index.js
index 8d34118296200..739a686aba8c3 100644
--- a/workspaces/libnpmexec/test/index.js
+++ b/workspaces/libnpmexec/test/index.js
@@ -24,39 +24,31 @@ const baseOpts = {
   yes: true,
 }
 
-t.test('local pkg', async t => {
+t.test('bin in local pkg', async t => {
   const pkg = {
-    name: 'pkg',
+    name: '@npmcli/local-pkg-bin-test',
     bin: {
-      a: 'index.js',
+      a: 'local-bin-test.js',
     },
   }
   const path = t.testdir({
     cache: {},
     npxCache: {},
-    node_modules: {
-      '.bin': {},
-      a: {
-        'index.js': `#!/usr/bin/env node
+    'local-bin-test.js': `#!/usr/bin/env node
 require('fs').writeFileSync(process.argv.slice(2)[0], 'LOCAL PKG')`,
-      },
-    },
     'package.json': JSON.stringify(pkg),
   })
   const localBin = resolve(path, 'node_modules/.bin')
   const runPath = path
+  const npxCache = resolve(path, 'npxCache')
 
-  const executable = resolve(path, 'node_modules/a')
+  const executable = resolve(path, 'local-bin-test.js')
   fs.chmodSync(executable, 0o775)
 
-  await binLinks({
-    path: resolve(path, 'node_modules/a'),
-    pkg,
-  })
-
   await libexec({
     ...baseOpts,
     args: ['a', 'resfile'],
+    npxCache,
     localBin,
     path,
     runPath,
diff --git a/workspaces/libnpmexec/test/run-script.js b/workspaces/libnpmexec/test/run-script.js
index 40b31ebdf2b19..4b1cafa0dec73 100644
--- a/workspaces/libnpmexec/test/run-script.js
+++ b/workspaces/libnpmexec/test/run-script.js
@@ -4,6 +4,7 @@ const baseOpts = {
   args: [],
   call: '',
   color: false,
+  flatOptions: {},
   path: '',
   runPath: '',
   shell: process.platform === 'win32'
@@ -73,7 +74,7 @@ t.test('colorized interactive mode msg', async t => {
       OUTPUT.push(msg)
     },
     runPath: '/foo/',
-    color: true,
+    flatOptions: { color: true },
   })
   t.matchSnapshot(OUTPUT.join('\n'), 'should print colorized output')
 })