16 February 2023

What you need to know

PPN 02/23: Tackling Modern Slavery in Government Supply Chains is not just an enhancement of PPN 05/19 which it replaces. Although the structure, language and some diagrams are familiar, there are important changes. In particular, many matters previously left to the discretion of the contracting authority (“may” or “should consider") are now stated in mandatory terms (“should” or “must”). 

For those within contracting authority commercial and procurement teams tasked with giving effect to the guidance, PPN 02/23 merits close and immediate scrutiny since In-Scope Organisations should take action to apply this PPN to existing contracts and new procurement activity from 1 April 2023. 

Bidding organisations should also take note. The crux of this guidance is that – particularly for procurements deemed to be at ‘high’ risk of modern slavery – the level of supply chain transparency, and extent to which bidders might be expected to interrogated risks further down their supply chain, will increase. Bidders may need time to adjust to this new reality to be able to comply with the enhanced level of scrutiny.

We have produced a graphic summary, showing in red the most important changes from PPN05/19.

Our 'top 10' summary of key issues and changes

1. It is crucial to take a risk-based approach when bringing modern slavery considerations into procurement design. This includes consideration of proportionality.

2. Modern slavery considerations feed into each stage of the procurement and contract lifecycle:

a) Identifying the need and initial approach

b) Determining the contract specification

c) Selection criteria

d) Award criteria

e) Terms of contract

f) Contract management,

3. The ‘Table 1’ risk matrix is materially unchanged. The presence of more than one of the indicators (industry, nature of workforce, supplier location, context of operation, commodity type and business / supply chain model) should trigger an assessment of whether the modern slavery risk is medium or high.

4. It will be important for contracting authorities to balance the risk-based approach against the (potentially - but not necessarily - competing) need to consider and mitigate barriers to entry for SMEs and Voluntary Community and Social Enterprises (VCSEs).

5. There is now additional focus on market engagement, both to aid understanding of where risks might lie and to test whether selection and award criteria relating to modern slavery are achievable for the relevant market, proportionate, and properly targeted.

6. Conviction of a modern slavery offence remains a mandatory ground for exclusion at selection stage, and evidence of modern slavery in a supplier’s supply chain may be discretionary grounds for exclusion. This remains a mandatory part of the Selection Questionnaire (SQ).

7. The precise thresholds of whether a contract is ‘medium’ or ‘high’ risk for modern slavery remains a matter for the contracting authority to determine, but the examples provided in the PPN guidance suggest that both thresholds might be slightly lower than previously considered (“For example, a procurement for PPE e.g. rubber gloves, with suppliers using labour recruiters could be considered high risk”).

8. For procurements assessed as ‘medium’ risk, there is an increased focus on use of the Social Value Model (PPN06/20) as a toolkit to address modern slavery concerns.

9. For procurement assessed as ‘high’ risk, there are enhanced obligations around the used of selection and award criteria and undertaking verifications prior to contracting. For example, there is an express requirement at SQ stage for bidders to submit certain self-declarations for all supply chain members (although it remains for contracting authorities to determine how far down the supply chain they want to collect this information). There are also additional template clauses which may be added to high risk contracts.

10. Contracting authorities must consider whether enhanced modern slavery clauses should be added to the Core Terms of the Model Services Contract. Where an instance of modern slavery is detected during the term of the contract, the emphasis remains on working with the supplier, with termination being a last resort.

Overall, those familiar with shifts in the overall landscape of the Modern Slavery Act regime over recent years will recognise the changes implemented by PN02/23 as aligned with the wider direction of travel. That direction is towards more mandatory language and incremental increases in pressure on both contracting authorities and industry to be able to demonstrate they are implementing appropriate and proportionate measures to interrogate supply chains and address modern slavery.

This article was written by Laura Wisdom and Lloyd Nail, legal procurement experts in our Band 1 ranked Procurement Practice.

Key contact

Headshot of Laura Wisdom

Laura Wisdom Partner

  • Public Sector
  • Defence
  • Procurement

Subscribe to news and insight

Burges Salmon careers

We work hard to make sure Burges Salmon is a great place to work.
Find out more