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Procurement Policy Note 01/22: Contracts with suppliers from Russia and Belarus

Published

By Rana Holland

The invasion of Ukraine by Russia has been met with unprecedented global condemnation. The UK Government has introduced financial and investment sanctions aimed at encouraging Russia to cease actions which destabilise Ukraine. 

This Procurement Policy Note (PPN) sets out how contracting authorities can further cut ties with companies backed by the states of Russia and Belarus.

It applies to:

  • all central government departments
  • their executive agencies
  • non-departmental public bodies

These organisations are referred to in this PPN as ‘In-Scope Organisations’

The government advises In-Scope organisations to apply the following provisions set out in this PPN:

  • Review their contract portfolio and identify any contracts where the prime contractor is a Russian or Belarusian supplier
  • Where a Russian or Belarusian prime contractor is identified, they should consider terminating that contract in accordance with the terms of the contract i.e. following a legally compliant process
  • Only proceed to terminate a contract if an alternative supplier can be sourced in line with Value for Money, affordability and with minimal disruption to public services

In-Scope organisations should take a proportionate and risk-based approach to reviewing their contract portfolio to identify Russian and Belarusian prime contractors. The focus should be on major contracts and those which could have the most impact and influence on the Russian or Belarusian regimes.

In-Scope organisations should only consider terminating a contract if:

  • There are suitable, commercially acceptable termination provisions contained in the contract
  • An assessment has been made as to the criticality of the contract and the availability and affordability of alternative providers
  • An assessment has been made of the financial and other implications of termination and these have been mitigated

In-Scope organisations should ensure these assessments are documented and any recommendations approved by the appropriate senior commercial or procurement leader in their organisation.

In all cases you must be proportionate and take a risk-based approach. Contracts may be complex and take a period of time to exit from, you should ensure you prioritise and take action on the areas of the highest impact. The reasons for terminating a contract should be documented and transparent, the final decision to terminate a contract rests with the contracting authority with responsibility for the contract.

Please refer to PPN 01/22 for further detailed guidance. Should you have any queries, please don’t hesitate to contact your Regional Procurement Advisor.

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