On 10 February 2023, the Cabinet Office published PPN 02/23 which sets out how UK Government departments, their executive agencies and non-departmental public bodies, and NHS bodies, must take action to ensure modern slavery risks are identified and managed in government supply chains. Juli Lau and Gonzalo Puertas examine what it says.
Other public sector organisations such as local authorities are not obliged to follow the PPN, but they may apply it. The PPN includes Guidance and a Quick reference Guide, all of them applicable to existing contracts and new procurement activity from 1 April 2023 and supersedes PPN 05/19.
At a glance
As was the case with the superseded guidance, the latest Guidance provides that relevant contracting authorities (CAs) should take action at both pre-award and post-award stages considering the Procurement Planning Checklist and the Procurement Process Flowchart (pages 11 and 12 of the new Guidance), and ensure that their overall approach to modern slavery is proportionate, tested with the market, ensures equal treatment, and does not have a discriminatory effect, deter bidders, or create unnecessary burdens on them during the bidding process and contract delivery.
New action required
In contrast with superseded guidance, the Guidance emphasises that CAs should assess modern slavery risks in all new procurements using the risk characteristic tool provided in page 6 (Table 1) of the Guidance. The table lists characteristics under six categories, namely:
- industry type,
- nature of workforce,
- supplier location,
- context in which the supplier operates,
- commodity type, and
- business/supply chain model.
CAs should decide what combination of characteristics falling in these categories will be high, medium or low risk and take action accordingly, starting with those suppliers where the risks are highest. For example, it is worth noting that according to the Guidance, construction (industry type), dangerous or physically demanding work (nature of the work) and reliance on subcontracted workers (business/supply chain model) are high risk characteristics.
CAs should then design the specification, award criteria, evaluation methodology, and contract clauses in line with the associated risk level. For high and medium risk procurements, CAs should now apply the Social Value Model where, if social value outcomes are identified, evaluation criteria should be developed as part of the award stage. The Guide to using the Social Value Model provides additional advice on evaluation criteria, methodology, scoring systems, weighting and pre-market engagement. For high-risk procurements, CAs should now include additional award questions (examples available in Annex A of the Guidance).
Also for high-risk procurements, and as part of the Standard Selection Questionnaire, CAs should under the new Guidance request Part 1 (potential supplier’s information) and Part 2 (exclusion grounds) declarations from all supply chain members and determine how far down the supply chain they want to collect this information depending on the type of good or service being procured. Even if a bidder has self-declared that exclusion grounds do not apply, CAs should now conduct due diligence on the bidder and their supply chain members.
In procurements where it is relevant and proportionate to do so, the new Guidance requires CAs to go a step further and set appropriate selection criteria and methodology by which to assess compliance with annual reporting requirements contained within Section 54 of the Modern Slavery Act 2015 and associated guidance. In this regard, the Guidance suggests using a pass/fail selection criterion as shown in page 20 of the Guidance, briefly summarised as follows:
- Pass. – Bidder is compliant, or bidder is a non-UK supplier but has provided a link to a sufficient equivalent statement;
- Pass. – Bidder is non-compliant, or bidder is a non-UK supplier that has not provided a link to a sufficient equivalent statement, but a satisfactory explanation and assurances of compliance in advance of contract award have been provided;
- Fail. – Bidder is non-compliant, or bidder is a non-UK supplier that has not provided a link to a sufficient equivalent statement, and no satisfactory explanation and assurances of future compliance have been provided.
On awarded and existing contracts, the new Guidance requires CAs to consider reviewing the risk assessment during the life of the relevant contract and, if the risk category changes, CAs should consider amending the relevant contract provisions where appropriate. The Guidance underlines that, in agreeing any contract variations, CAs should ensure a proportionate approach and response to the risk agreed, and not to ‘gold-plate’ the requirement on suppliers as this may add cost. In addition, we would remind CAs to be mindful of their duties under procurement law when considering making such amendments after contract award.
The Guidance stresses that CAs’ evaluation methodology, scoring matrix and overall approach to modern slavery should be tested with the market before the procurement is launched. The Guidance also clarifies the application of mandatory and discretionary exclusion grounds in relation to modern slavery and provides for an expanded Modern Slavery Example Contract Clause (Annex C of the Guidance), as well as a new e-learning training course.
Key takeaway and next steps
The Guidance sets out new and more rigorous procurement requirements for CAs to tackle modern slavery in their supply chains during pre and post award stages, especially in high-risk procurements. So CAs are compliant with these requirements, they should take additional steps and amend the relevant documents as explained above before new procurements are launched from 1 April 2023. In relation to existing contracts, CAs should consider reviewing the relevant modern slavery risk assessment using the Guidance and, if the risk category changes, CAs should consider amending the relevant contract provisions where appropriate. Finally, the Guidance suggests that CAs should seek legal advice on more nuanced issues, most notably around designing the specification, and imposing and enforcing contractual requirements to tackle modern slavery.
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