Procurement Policy Note 01/22: contracts with suppliers from Russia and Belarus · first published 28 March 2022
This Procurement Policy Note (PPN) 01/22 instructs public bodies — central government departments, their agencies, local authorities and parish councils in England — to review their contract portfolios and consider terminating any contracts where the prime contractor is Russian or Belarusian. It applies to all contract values, above and below normal procurement thresholds. For new procurements, buyers are given guidance on how they may (but are not required to) exclude Russian or Belarusian suppliers from bidding. If your business is not Russian or Belarusian owned or controlled, this PPN does not directly restrict you from bidding. However, if you are a UK-registered business with a Russian or Belarusian parent company or with Persons of Significant Control (PSC — individuals owning more than 25% of shares or voting rights, or who can appoint or remove the majority of the board) resident in Russia or Belarus, you may be caught by these rules and could face contract termination or exclusion from new bids.
WHO THIS APPLIES TO
THE ENKII VIEW
For the vast majority of UK-based SMEs (small and medium-sized enterprises) with no Russian or Belarusian ownership links, this PPN creates an indirect opportunity: contracts being exited by public bodies need replacement suppliers, particularly in energy and other markets where Russian/Belarusian firms had a presence. SMEs that can mobilise quickly and demonstrate clean ownership structures (no Russian/Belarusian PSC or parent) are well-placed to pick up retendered work. The risk side is narrow but serious: any SME with a Russian or Belarusian parent, ultimate beneficial owner, or PSC could face immediate contract termination or exclusion from new bids, regardless of contract value.
1. Immediately check your Companies House PSC register and ownership structure. If any individual holds more than 25% of your shares or voting rights, or can appoint/remove your majority board, and that person is resident in Russia or Belarus, you are at risk of contract termination or exclusion from new bids. Take legal advice and, where possible, document any UK substantive operations clearly.
Any SME with a Russian or Belarusian parent company, PSC, or ultimate beneficial owner — The PPN defines a 'Russian or Belarusian contractor' to include UK-registered firms controlled by Russian/Belarusian entities or PSCs — buyers are actively checking Companies House and open sources to identify these firms.
2. Prepare a short ownership-transparency statement confirming your company's country of incorporation, PSC details, and that no Russian or Belarusian entity controls your firm. Make it easy for buyers to clear you quickly during due diligence.
SMEs bidding for new public contracts — all sectors — The PPN instructs buyers to 'conduct due diligence to check supplier details with Companies House and other open information sources, or seek verification directly from the supplier' — being proactive speeds up your clearance.
3. Monitor public contract notices and framework re-tendering activity for contracts being exited under this PPN. Position your business as a ready, sanctions-clean alternative supplier by highlighting your UK base and rapid mobilisation capability in your bid.
SMEs able to supply services or goods previously provided by Russian or Belarusian contractors — especially in energy-adjacent markets — The PPN requires buyers to source alternative suppliers before terminating, creating direct replacement opportunities: 'Only proceed to terminate a contract if an alternative supplier can be sourced in line with value for money, affordability and with minimal disruption to public services.'
4. Review your subcontractor base now, even though buyers are not yet required to demand full supply chain mapping. Identify any Russian or Belarusian subcontractors you rely on and develop contingency alternatives, so you can respond quickly if a buyer raises a concern.
SMEs with Russian or Belarusian subcontractors in their supply chain — Although 'there is no requirement to ask prime contractors to consider terminating subcontracts with Russian/Belarusian subcontractors at this stage', buyers may still raise resilience questions and your ability to substitute subcontractors is a condition of any contract continuation.
Every rule below quotes the official document verbatim.
This PPN applies to central government departments, executive agencies, non-departmental public bodies, best value authorities (under the Local Government Act 1999), and parish councils in England. (All in-scope organisations, all contract values)
“This PPN applies to all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies, and to best value authorities within the meaning of section 1 of the Local Government Act 1999 (c. 27) and parish councils in England.”
The PPN applies to all contracts above and below the Public Contracts Regulations 2015 thresholds where relevant and proportionate. (All in-scope organisations, all contract values)
“In-Scope Organisations should take action to apply this PPN to all contracts (i.e. above and below the thresholds set out in the Public Contracts Regulations 2015) where it is relevant and proportionate to do so.”
In-scope organisations must apply this PPN with immediate effect from the date of publication (28 March 2022). (All in-scope organisations)
“In-Scope Organisations should apply the provisions of this PPN with immediate effect.”
A 'Russian or Belarusian prime contractor' means an entity constituted under Russian or Belarusian law, OR a UK-registered or UK-operating entity controlled by a Russian or Belarusian entity (e.g. via a parent company or PSC holding more than 25% of shares, more than 25% of voting rights, or the right to appoint/remove the majority of the board). (All in-scope organisations, existing contracts)
“(i) an entity constituted or organised under the law of Russia or Belarus; or (ii) an entity registered in the UK or with substantive business operations in the UK, or another country but controlled by an entity based in Russia or Belarus e.g. a parent company or by 'Persons of Significant Control' (or beneficial owner is defined as holding i) more than 25% of shares in the company; and/or ii) more than 25% of voting rights in the company; and/or the right to appoint or remove the majority of the board of directors).”
Buyers should review their contract portfolio, identify Russian or Belarusian prime contractors, and consider terminating those contracts through a legally compliant process — but only if an alternative supplier can be sourced in line with value for money and with minimal disruption. (All in-scope organisations, existing contracts)
“Where a Russian or Belarusian prime contractor is identified, they should consider terminating that contract in accordance with the terms of the contract i.e. following a legally compliant process. Only proceed to terminate a contract if an alternative supplier can be sourced in line with value for money, affordability and with minimal disruption to public services.”
For new procurements, buyers may (but are not required to) decline to consider bids from suppliers constituted under Russian or Belarusian law, or whose PSC information lists Russia or Belarus as place of residency — unless the supplier is UK-registered or has significant UK business operations. (All in-scope organisations, new procurements)
“Regarding new procurements, you could decline to consider (or otherwise exclude from participating in the procurement) bids from suppliers who are constituted or organised under the law of Russia or Belarus, or whose 'Persons of Significant Control' information states Russia or Belarus as the place of residency, unless the supplier (or any member of their supply chain they rely on to deliver the contract): is registered in the UK or in a country the UK has a relevant international agreement with reciprocal rights of access to public procurement; and/or has significant business operations in the UK or in a country the UK has a relevant international agreement with reciprocal rights of access to public procurement.”
A supplier with a UK registration or significant UK business operations must not be automatically excluded from a new procurement, as PCR 2015 non-discrimination and equal treatment provisions still apply. (All in-scope organisations, new procurements)
“If either of these criteria apply, the supplier should not be automatically excluded from a new procurement, as the non-discrimination, equal treatment and remedy provisions contained within the Public Contracts Regulations 2015 apply.”
Substantive business operations means having a registered office, factory or other permanent base in the relevant country from which meaningful business operations are being conducted. (All in-scope organisations)
“Substantive business operations means having a registered office, factory or other permanent base in the relevant country from which meaningful business operations are being conducted.”
The public sector's main exposure to Russian/Belarusian suppliers is in energy markets; specialist energy advice must be sought before terminating any energy supply contract. (All in-scope organisations, energy contracts)
“The public sector's exposure to Russian and Belarusian suppliers is primarily limited to the energy markets, where there have been significant price fluctuations and the market is considered volatile. You must seek advice from an energy expert and/or a relevant public sector buying organisation before taking action to terminate an existing energy supply contract.”
The Local Government (Exclusion of Non-commercial Considerations) (England) Order 2022 came into force on 1 July 2022, enabling best value authorities and parish councils in England to take nationality of supplier into account — something previously prohibited. (Best value authorities and parish councils in England)
“The Local Government (Exclusion of Non-commercial Considerations) (England) Order 2022, came into force on 1 July 2022, to allow best value authorities and parish councils to apply this PPN.”
There is no requirement for prime contractors to map their full supply chains or to terminate subcontracts with Russian/Belarusian subcontractors at this stage. (All in-scope organisations, supply chain)
“There is no requirement to ask prime contractors to consider terminating subcontracts with Russian/Belarusian subcontractors at this stage or from undertaking full supply chain mapping.”
Where volume-based contracts exist, reducing the volume to zero could achieve the same effect as termination if termination is not feasible. (All in-scope organisations, existing contracts)
“Where volume-based contracts exist, a reduction in volume to zero could achieve the same effect if termination is not feasible.”
This briefing is enkii's interpretation of the official document — the official text always governs.
Source document © Crown copyright, reused under the Open Government Licence v3.0 via the GOV.UK Content API. enkii tracks every Procurement Policy Note and briefs changes the day they land — see all briefings.