Procurement policy note 05/16: Open book contract management · first published 24 May 2016
Open-book contract management means a buyer has the right to inspect a supplier's underlying cost and financial data during a contract, to verify that the public sector is getting value for money. PPN 05/16 tells contracting authorities (central government buyers) when and how to apply this practice, with the core principle being proportionality — it should only be used where the risk level and complexity of the contract justifies the additional cost. The note is designed to ensure open-book is applied fairly rather than as a blanket requirement on every contract. If you supply central government on complex or high-value contracts, you should be aware that open-book obligations may be written into your contract terms. Full detail of the specific thresholds and obligations is in the PDF, which was not available for this brief.
WHO THIS APPLIES TO
THE ENKII VIEW
For SMEs, open-book requirements can be burdensome — they require maintaining detailed, auditable cost records that larger suppliers manage more easily. The proportionality principle is the key protection here: the document explicitly ties open-book use to risk and complexity, meaning it should not routinely appear on lower-value or straightforward contracts. SMEs bidding on complex, high-value central government work should anticipate open-book clauses and ensure their finance and record-keeping systems can support them before signing.
1. Check your contract terms for open-book clauses before signing — if present, ensure your accounting and cost-tracking systems can produce auditable cost breakdowns on request.
SMEs bidding on complex or high-value central government contracts — PPN 05/16 obliges central government buyers to apply open-book management on contracts where risk and complexity justify it; suppliers must be operationally ready to comply.
2. If you see open-book requirements in a lower-value or straightforward contract, challenge the proportionality — the policy explicitly limits open-book to contracts where the cost of applying it is justified by risk and benefit.
SMEs tendering for central government work — The document states open-book should only apply 'where the additional cost is justified by the level of benefits and risk', giving suppliers a basis to push back on disproportionate application.
Every rule below quotes the official document verbatim.
Open-book contract management must be applied in a way that is fair and proportionate to the risk level and complexity of the contract. (Central government contracting authorities applying open-book contract management)
“assists in enabling open book contract management to be used in a fair way depending on the risk level and complexity of the contract”
Open-book should only be used on contracts where the additional cost of applying it is justified by the level of benefits and risk. (Central government contracting authorities applying open-book contract management)
“ensure it is used on those contracts where the additional cost is justified by the level of benefits and risk”
This briefing is enkii's interpretation of the official document — the official text always governs.
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