Manage contract
Preparing suppliers
After the contract award standstill period has ended, it is good to hold a kick-off meeting with the suppliers. This meeting provides an opportunity to:
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Explain the contract clause by going through this guidance.
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Establish contact with the individuals responsible for due diligence.
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Inform about the monitoring process.
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Answer any questions.
Establishing early contact with the supplier’s due diligence representatives is crucial for smooth collaboration and effective monitoring.
Planning monitoring
Monitoring is crucial for several reasons:
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Ensuring that the supplier complies with the contract clause.
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Guaranteeing that the Swedish Regions receive what has been requested.
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Preventing unfair advantages for non-compliant companies.
Already in the preparation phase, you should have planned for how to carry out the monitoring, even if the details are set now. Specifically, this involves determining:
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When monitoring shall take place.
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How it will be carried out.
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Who is responsible for it.
Purchasing categories with particularly high risks are jointly monitored by the National Secretariat for Sustainable Public Procurement. The results are published here on the website. You can also contact the secretariat for information about which suppliers will be monitored during the year.
Carrying out monitoring
Excerpt from the contract clause
Supplier shall participate in and cooperate with [contracting organisation’s] monitoring of the commitments in the Supplier Code of Conduct (section 1) and the due diligence process (section 2). Monitoring may be conducted through various methods such as dialogue, self-assessment, supply chain transparency and audits.
Suppliers are required to participate in monitoring.
The contract clause allows for the use of various methods for monitoring.
Managing deviations
Excerpt from contract clause
Supplier shall address deviations from the commitments in the Supplier Code of Conduct (section 1) and the due diligence process (section 2). Focus shall be on improvements in Supplier’s operations and supply chains.
When managing deviations, a focus on improvements is essential. This is best achieved through collaboration with suppliers, regardless of whether the issue concerns the Supplier Code of Conduct or the due diligence process. Deviations are common, even among suppliers actively working with sustainability. Some issues may be easy to address, and not all are equally severe.
In the event of identified deviations, an action plan shall always be established, including a timeline that clearly outlines how and when the supplier shall address the deviations. If the supplier does not comply with the established plan, the contract clause includes several sanction options.
The Swedish Regions also have a national escalation procedure that specifies the actions to be taken if the deviations are not resolved. When using the procedure, it is important to:
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Document each step.
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Ensure that the prescribed actions are followed.
Terminating a contract should be a last resort after repeated attempts to address deviations. Even in cases of severe deviations, an immediate termination can sometimes worsen the situation, making it crucial to exit responsibly.
For example, the code of conduct states that employers shall develop or participate in and contribute to policies and programmes which provide for the transition of any child found to be performing child labour, to enable him or her to attend and remain in education until he or she is no longer a child. This process takes time and requires long-term collaboration with the sub-supplier. Simply dismissing the child, or terminating the contract, could push the child into more dangerous work.
Despite this, the contract clause includes the possibility to terminate the contract with immediate effect if a severe deviation can be demonstrated. However, this only applies if the responsible party does not immediately take action to prevent and mitigate the deviation.
Evaluating results
Before extending or terminating a contract, you should evaluate the contract performance:
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In which contracts has the contract clause been applied?
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Which of these contracts have been monitored?
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How many audits have been conducted per contract/supplier?
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What were the costs of the audits?
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How have you influenced the suppliers’ due diligence and the conditions in the supply chain?
The evaluation provides valuable insights for future procurements of similar goods or services.
The evaluation of the previous contract period is important information in the preparatory phase for future procurement of similar goods or services.
Communicating results
It is important to communicate your due diligence efforts to highlight how procurement contributes to improved supply chain conditions. Your communication can focus on:
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Have you reached your goals?
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What goals will you set for the next period?
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What lessons have you learned?
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How have you invested in training and skills development?