Government issues procurement policy note on cutting ties with Russia and Belarus
Government departments and other public bodies have been told to “urgently review” and find ways to terminate any contracts they have with Russian or Belarusian prime contractors in light of Russia’s invasion of Ukraine, where it is legally possible and financially feasible to do so.
The procurement policy note highlights that contract termination should only be considered if:
Suitable, commercially-acceptable termination provisions are contained in the contract;
The criticality of the contract has been assessed, along with the availability and affordability of alternative suppliers, and;
Financial and other implications of termination have been assessed and mitigated.
The PPN said any assessment should be documented and recommendations “approved by the appropriate senior commercial or procurement leader in their organisation” whilst acknowledging that the replacement costs of alternative suppliers may indeed be higher then under present commercial arrangements.
The guidance also clarifies that English local authorities, whilst not covered by the guidance, are presently unable to terminate commercial ties to companies of Russian or Belarussian origin.
This is due to the provisions of the Local Government Act 1988 which prohibits Councils from taking any non-commercial factors (including country of origin) into account when awarding or terminating contracts. Secondary legislation to remove this legal obstacle is promised within the guidance.
The governments of Wales, Scotland and Northern Ireland will issue their own guidance separately, but they are each unlikely to differ substantially from the position adopted by the UK government.
