How your buying decisions have the power to help put an end to modern slavery – Procurement Essentials

NB: This article was originally published on 3 November 2023. All information was correct at the time of writing, but may not be fully applicable following the introduction of the Procurement Act 2023.

What is modern slavery?

Around the world, right now, millions of innocent men, women and children are being forced into various forms of modern slavery. Evidence suggests that the risk of modern slavery affects every industry, from electronics to agriculture, manufacturing, construction, and transportation.

There are many different types of modern slavery and it’s often used as an umbrella term. Some of the forms of modern slavery are:

• human trafficking: the act of recruiting, transporting, or transferring a person through coercive means for the purpose of exploitation
• forced labour: work or service taken from a person under the menace of a penalty and for which the person has not offered themselves voluntarily
• debt bondage: a worker pledging their labour or the labour of others under their control as security for a debt; when either the real value of the work undertaken is never applied to repayment of the debt, or the length and nature of the work that must be undertaken is never fully defined or limited
• sale and exploitation of children: the sale and exploitation of children involves situations where children are transferred by one person to another for remuneration or other consideration

Eradicating modern slavery in public sector supply chains – the challenges

Modern slavery is so pervasive that it is likely to exist in the supply chains of the goods and services purchased by governments across the globe, from the technology we buy to the construction projects we fund.

Within the UK public sector supply network there are tens of thousands of suppliers, many of whom have complex global supply chains, making effective oversight difficult to achieve, especially in the lower tiers of subcontracting. But, with gross spending on public sector procurement totalling £379 billion in 2021/22 across the UK, the public sector can use its extensive buying power to help mitigate the risks of modern slavery occurring in its supply chain.

What the law currently says

Public sector suppliers must comply with all the applicable human rights and employment laws as set out in the Modern Slavery Act 2015.

Under the act, procurement regulations have been amended to make certain modern slavery offences, such as child labour and human trafficking, grounds for the mandatory exclusion of bidders from public procurements. Section 54 includes provisions that make suppliers accountable for slavery and labour abuses in their whole operations, including their supply chains.

Suppliers who have a turnover of £36 million (or more) and carry out their business (or part of their business) in the UK are required to publish a modern slavery statement on their website and update it annually. The statement must include details of their organisation’s modern slavery policies and due diligence processes, and provide details of the steps taken to assess and manage any risks in their business and supply chains.

On 13 February 2023, the Cabinet Office published a new Procurement Policy Note (PPN) dealing with modern slavery in Government supply chains. Procurement Policy Note 02/23 looks at how contracting authorities can tackle the issue of modern slavery in their supply chains. Cabinet Office has also published a guidance note to accompany the PPN.

The PPN applies to all central government departments and their executive agencies and non-departmental public bodies and NHS bodies (In-Scope Organisations). All In-Scope Organisations must apply the actions set out in the PPN to both existing contracts and new procurement activities from 1 April this year. Other public sector contracting authorities are also encouraged to apply the approach set out in the PPN.

PPN 02/23 sets out 4 key areas of activity for buyers to prevent modern slavery in supply chains: identifying and managing risks in new procurements; assessing existing contracts; taking action when victims of modern slavery are identified; and training.

Identifying and managing risks in new procurements

A robust approach to pre-procurement activity will ensure that modern slavery risks are appropriately identified and mitigated at the earliest stage.

As a starting point, organisations should consider which category of risk their procurement falls under, using the PPN 02/23 guidance note. For example, certain industry areas, including construction, manufacturing and electronics, and healthcare and social care, are identified as being high-risk. To better understand where your organisation may be at particular risk The Responsible Sourcing Tool is a good first step.

Using the example of construction, local authorities undertake a significant volume of construction work ranging from repair and maintenance programmes to major refurbishment and new build projects across various sectors including schools, social care, housing, infrastructure and highways. Construction workers, particularly those provided by agencies, can be vulnerable through a range of factors, such as the absence of proper contracts or terms and conditions. This can sometimes result in non-payment of minimum wage or holiday pay and a general lack of employment protections. To add an extra layer of complexity and risk, for the majority of construction contracts procured across the public sector, buyers are often not directly involved in the procurement of subcontractors. These are carried out by the prime contractors and the supply chain tiers beneath them, potentially exposing workers to unethical practices.

In the case of a new, high risk construction procurement, considerations at specification, evaluation and award stage could include:

• have the Social Value Model Themes and Outcomes been considered? Have you tested this with the market to ensure it is not burdensome or likely to deter SMEs/VCSEs from bidding?
• have bidders been asked more detailed questions on how they will address the requirements set out in the specification. For example, where subcontractors are used, bidders should be asked how the supply chain will be managed and monitored for modern slavery supply chain risks (such as paying workers below minimum wage) and their action plans for tackling cases as they arise.
• how will you verify that there are no offences or evidence of modern slavery which give rise to grounds for exclusion from the procurement? For example, have you carried out your supplier due diligence? Crown Commercial Service (CCS) has worked with Home Office and Cabinet Office to develop a dedicated modern slavery assessment tool (MSAT), which provides a focused and detailed question set that asks organisations to provide answers and evidence relating to the due diligence processes that are in place within the organisation and its supply chain.

Assess existing contracts

At this stage it’s crucial to check if the terms and conditions of the contract have been set out. Do they meet your needs to address risks of modern slavery? Again, using the example of a local authority construction project, where relevant, you should set out your rights to conduct site visits, audits and/or receive management information. Other considerations include:

• agree KPIs including actions to identify modern slavery
• contract management meetings: review performance and embed continuous improvement, using tools such as the MSAT to assist.

Taking action

Action should always be taken by public sector buyers when instances of modern slavery and human rights abuses have been uncovered in the supply chain, but contracting authorities should work openly and proactively with suppliers to try to resolve issues and change working practices collaboratively.

Terminating a contract is often not the best course of action as it can leave victims more vulnerable.

Training

All commercial staff involved in managing contracts should be given appropriate training. This will help to raise awareness of the issues and identify risks and ensure that suspected instances of modern slavery are handled correctly.

As part of Government’s efforts to tackling modern slavery in global supply chains, the Home Office’s Modern Slavery Unit and Joint Security and Resilience Centre have produced an e-learning course, available on the Government Commercial College website, for public sector commercial staff on the practical steps they can take throughout the commercial lifecycle to identify and mitigate modern slavery risks.

How CCS is helping tackle modern slavery

At CCS we want our customers to be able to use our commercial agreements with the assurance that we use the best due diligence methods available to us. Find out more about how we’re helping customers tackle the modern slavery risk in their supply chains.

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