Plan for supplier failure while your supplier is still healthy
The collapse of Carillion in 2018 taught the UK public sector a brutal lesson: by the time a major supplier is visibly in trouble, it is too late to start planning for its failure. The Resolution Planning Guidance Note, published in May 2021 alongside the Sourcing and Construction Playbooks, is the institutional answer. It asks a simple question of every critical or high-value contract: if this supplier went under next month, do we know enough, today, to keep the service running? For most authorities the honest answer is still no.
Why the timing rule is the whole point
The guidance is blunt about sequencing: suppliers must provide resolution planning information before they get into financial distress, because a company fighting for survival is writing rescue plans, not contingency plans for its own death. That is why the obligations bite within weeks of contract signature, a Structural Review within 60 days, a continuity plan within 40, an exit plan within three months, and why the provisions go into contracts from day one even when the trigger may only arrive later.
Authorities that treat these as tick-box deliverables miss the value. The point of the Structural Review is to surface the awkward truths of group structures: the contracting entity that owns nothing, employs nobody and depends on a parent for payroll, IT and finance. Insolvency happens by legal entity, and knowing which entity you actually contract with, and what it can do alone, is the difference between an orderly transfer and a standstill.
What most organisations get wrong
The first mistake is scope blindness: not knowing which contracts are in scope at all. The tests are mechanical, Gold-tier criticality, £10m a year for services, £50 million revenue with half from the public sector for dependent suppliers, but they only work if someone runs them, at procurement start, against accurate contract data. The second mistake is confusing resolution planning with financial due diligence. The guidance is explicit that CRP information must never be used to assess financial standing or to squeeze suppliers in negotiation. It exists for one purpose: continuity when things fail.
The third mistake is assuming a plan on file is a plan that works. The guidance recommends spot tests precisely because untested plans decay: dry run the continuity plan, demand the emergency exit information within the contractual deadline, rehearse your own first 48 hours after an insolvency notification. A plan that has never been exercised is a hope, not a control.
The termination blind spot
The least discussed part of the guidance may be the most interesting: before terminating any contract worth over £5m a year with a Public Sector Dependent Supplier, authorities should liaise centrally. The logic is systemic. A supplier earning most of its revenue from the public sector can be pushed into distress by one department's termination, taking down services it delivers for everyone else. Your contract decision is not only your risk.
This is government learning to think like a system rather than a collection of buyers, the same instinct behind central assurance of CRP information and the 12-month reuse rule that stops suppliers drowning in duplicate requests. Individual authorities keep their responsibilities, but the picture is assembled once, centrally, where it can actually be acted on.
Make it routine, not heroic
Resolution planning fails when it depends on institutional memory and heroic spreadsheet work at the moment of crisis. It succeeds when it is boring: criticality assessed at procurement start, clauses included by default, plans logged and refreshed annually, supplier health monitored continuously, and an audit trail that shows all of it happened. The authorities that cope best with a supplier failure will be the ones for whom the first day of the insolvency is mostly a matter of opening documents they already have.
Start with an inventory. Which of your contracts are Gold. Which exceed the value thresholds. Which suppliers are public sector dependent. Which contracts carry the clauses, and which plans are current. Until that table exists, resolution planning is an aspiration, not a capability.
The takeaways
- Resolution planning information must be collected while suppliers are healthy: distress is too late.
- Know your legal entities: insolvency happens by entity, and group dependencies decide whether services can continue.
- CRP information is for continuity only, never for negotiation or financial standing checks.
- Untested plans decay: dry runs and exit information drills are part of the discipline.
- Check centrally before terminating large contracts with public sector dependent suppliers.
Want the full breakdown?
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