8 things you need to run a supplier blacklist
The news that UK government will implement a new supplier blacklist, banning errant companies from winning contracts has raised the question of how to operate a bidding blacklist in public contracting.
Below we outline the 8 essentials things that a government needs to have in place to make a blacklist work.
A process that everyone can sign up to
For any blacklist to function properly there needs to be an agreed process that both parties can agree to. Suppliers will need to agree to performance standards set out by government and that breaches of these standards could result in a blacklist.
In return, suppliers will also want assurances about the process of initiating a blacklist, for instance, will there be a system of warnings prior to blacklisting? What behaviour would be so egregious that no warning was required? What effect would a blacklist have on existing contracts and when does data get made public?
It is likely that this process will need to be defined and agreed to within the contracts that suppliers sign with public bodies.
The first step required for a blacklist is a public page detailing that the blacklisting has come into effect, the reason it was established, who it effects and the scope of any ban, e.g. in some cases a company may be blacklisted explicitly from healthcare activities. Critically the steps that a company needs to take to remove the blacklist should also be published alongside the timeframe of any blacklist.
It is essential that any blacklist is linked to a company identifier, so that a blacklist can be effected against all of the companies in a group of companies. It is vital that changes to company names can’t be used to evade blacklists. In some cases it may be desirable to block a company director too, so that any new companies established in that director’s name are automatically added to any blacklist.
The use of beneficial ownership data, data that discloses corporate structures and ownership, is very valuable when it comes to blacklisting. Beneficial ownership data allows administrators to extend a blacklist down a corporate chain to known subsidiaries of a given company, or up a corporate chain to the companies that have significant ownership stakes in a given company. To find out more about beneficial ownership data, please visit our friends at Open Ownership.
Blacklists should be based on openly accessible contract data, so that anyone can see which contract a supplier was blocked from, who the purchaser was and the value of the contract. This data should be published openly and in the Open Contracting Data Standard so that it accessible to other systems and so that government agencies with existing contracts can establish whether a blacklist would prevent an incumbent supplier bidding for a new contract.
As well as having a public record of a blacklist it is important to have this data in a form that can be used by computers, this should include the details of the companies that the blacklist applies to, the dates when the blacklist applies and the status of a blacklist, e.g. whether it is active or whether it has been rescinded as a result of improvements being made by the company.
The blacklist data should be maintained daily, so that it can be used as a reliable and dependable source of the truth. This data can then be used as a reference point for any public body that has to enforce the blacklist. If the data is widely accessible a supplier can be informed early in the bidding process that a blacklist is in effect and that any bid will not be considered.
Data as a service
To make a blacklist work public contracting systems should have the ability to access information programmatically, in all likelihood this means an API populated with well structured blacklist data. Providing an API would allow other software systems to check whether a bidder has been blacklisted and for buyers to ascertain whether the blacklist applies to their tender.
With an API it will be possible for government to build services on top of the API, for instance to automate publication of further information about a blacklist, such as a revoked blacklist or additional evidence to support a blacklist.
For a blacklist to function as a powerful disincentive for misconduct by companies the information about the black list must be open to all. Being blacklisted should come with consequences, it is right that those consequences extend beyond the scope of missing out on public contracts and include the potential for other organisations to make judgements about whether they do business with a blacklisted supplier.
For this reason, blacklist data should be openly licensed and available to all, so that other companies and NGOs can access the data. The data on blacklisting is particularly useful to banks and insurance companies who want to be able to evaluate companies that they lend to or provide cover for.
Supplier blacklists need to be designed and run as a service. Governments wishing to run blacklists need to invest in both staff and technology to make sure that a blacklist is maintained correctly, but also to handle issues and problems. For instance, there will need to be an appeal process so that any blacklist being applied erroneously can be overturned.
So a blacklist can’t just be an excel sheet held in one of your departments, it takes careful consideration, a useful flow of data and a consistent set of policies and procedures.
An apparently simple idea, ‘stop working with bad suppliers’ rapidly becomes a complex and demanding task for governments, one that requires careful consideration and investment in technology.
Implementing a blacklist also requires a significant determination to ensure that the policies and procedures associated with a blacklist are successfully implemented; one of the greatest risks facing policy teams would be to discover that after a year of functioning that the service has not been used to blacklist a single supplier.
Building a process that doesn’t impact anyone will be easy, building one that works, well that’s much, much harder.
To find out more about how our data and technology could be used to run a supplier blacklist get in touch.
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