Supply chain visibility in Central Government Contracts

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With effect from 1 May 2018, Central Government Departments, their Executive Agencies and Non Departmental Public Bodies must comply with new requirements regarding supply chain visibility in procuring contracts.

Following a Procurement Policy Note (PPN) issued by the Crown Commercial Service, all new procurements valued above £5 million per annum which are subject to the Public Contracts Regulations 2015 by such ‘In-Scope Organisations’ must include clauses requiring the successful prime suppliers to advertise on Contracts Finder subcontract opportunities above £25,000.

In addition, prime suppliers will be required to report on how much they spend on subcontracting; and separately how much they spend with SMEs and voluntary, community and social enterprises in the delivery of the original contract.

The requirement to advertise does not apply to subcontracts that were arranged or existed prior to the award of the contract, e.g. if the prime contractor established its supply-chain as part of the tender process.

The requirements may not apply where the contract conditions would not be “relevant and proportionate” to the contract subject-matter, e.g. where there are issues of national security.

In-Scope Organisations will need to update their terms and conditions and their procurement practices to meet the new requirements. The PPN provides standard clauses that can be used by contracting authorities.

Other public bodies not caught by the requirements, such as local government, may also wish to consider their approach to supply chain visibility in light of the PPN.

Any contracting authorities, suppliers, sub-contractors, SMEs and community and social enterprises requiring more detail on the requirements or any guidance on how it could affect them should contact Ben Sheppard or Richard Auton.