The UK government has introduced a number of financial and investment sanctions aimed at encouraging Russia to cease its actions in Ukraine. The Cabinet Office has now published a Procurement Policy Note (PPN) relating to contracts with suppliers from Russia and Belarus.

The PPN applies to all central government departments, their executive agencies and non-departmental public bodies – referred to as ‘in-scope organisations’ throughout the PPN. All in-scope organisations should apply the provisions of this PPN with immediate effect.

Other public sector contracting authorities – including maintained schools and academies – should consider applying the approach as set out in this PPN and those with a commercial or procurement role should have this PPN brought to their attention. It is not a legal requirement for schools to follow the PPN; however, they should take note of the advice and consider taking action as appropriate.

Schools are being advised to review their contract portfolio and identify any contracts where the prime contractor is Russian or Belarusian. If a Russian or Belarusian contractor is identified, schools should consider terminating the contract in accordance with the terms of the contract, i.e. following a legally compliant process.  Any decisions to terminate a contract should be made on a case by case basis and within existing legal restrictions, financial allocations and budgets.

In all cases, it is important be proportionate and take a risk-based approach. Contracts may be complex and take a period of time to exit from; schools should ensure they 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.

LAs have a ‘best value duty’ under section 3 of the Local Government Act 1999 – this means that if an alternative supplier cannot be sourced in line with value for money, affordability and with minimal disruption to public services, the contract should not be terminated.

The public sector’s exposure to Russian and Belarusian suppliers is primarily linked to the energy markets. The PPN states that legal advice must be sought from an energy expert or relevant public sector buying organisation before taking action to terminate an existing energy supply contract to ensure that an alternative source of supply is available and affordable.

In addition to talking to the current provider or a relevant public sector buying organisation, schools can also visit ‘get help buying for schools’ for commercial and procurement advice. Legal advice should be sought where necessary through each school’s usual channels.

When establishing whether an alternative source of supply is required and whether those sources are available, schools need to:

  • Estimate the timescales associated with securing an alternative supply as this might impact the notice period of termination.
  • Consider the cost and complexity of switching suppliers and the time required for the new suppler to deliver.
  • Ensure that the alternative supplier does not result in any form of payment to Russian or Belarusian suppliers.
  • Consider whether Russian or Belarusian subcontractors can be substituted for alternative suppliers, without disrupting supply or the contract.
  • Where a decision is made to terminate a contract, ensure that the decision will not negatively impact, or put at risk, any other contracts with the same supplier which are not being terminated.

Contracting authorities should take a risk-based approach to cancelling contracts by assessing the level of impact the termination of a contract under this PPN would have.

Contracting authorities should clearly document decision making in relation to assessing whether contracts should or should not be terminated and ensure there is an audit-trail to support the decision.

Cabinet Office (2022) ‘Procurement Policy Note – Contracts with suppliers from Russia and Belarus’

Cabinet Office (2022) ‘Procurement Policy Note 01/22 – Frequently Asked Questions (FAQs)’