Resolution planning for supplier insolvency: the official guidance note, explained

The key facts

• Published in May 2021, following the Sourcing Playbook and Construction Playbook, to reduce the risk of interruption to UK public services from supplier insolvency.
• It applies to new procurements of Critical Service Contracts, other outsourced service contracts worth over £10m per year, and Critical Construction Contracts.
• In-scope contracts should require suppliers to provide Corporate Resolution Planning (CRP) Information and an insolvency continuity plan, and to certify annually whether they are a Public Sector Dependent Supplier.
• CRP Information has three elements: an exposure list of critical contracts, a corporate resolvability Structural Review, and group-level financial information.
• A Public Sector Dependent Supplier is one with annual revenue over £50 million of which more than 50 percent comes from the UK public sector, or a member of a group meeting that test.
• Suppliers or parents with strong credit ratings (Aa3 or higher from Moodys, AA minus or higher from Standard and Poors or Fitch) are exempt while they hold those ratings, unless a Financial Distress Event arises.
• The Cabinet Office Markets and Suppliers Team obtains, holds and assures CRP Information, with strict confidentiality: it must never be used in negotiations, bid evaluation or financial standing assessments.
• Before terminating any contract worth over £5m per year with a Public Sector Dependent Supplier, authorities should liaise centrally, because one termination can undermine the supplier's ability to deliver other public contracts.

What the guidance is and who it applies to

The Resolution Planning Guidance Note, published in May 2021, follows the Sourcing Playbook and Construction Playbook. It explains how contracting authorities can reduce the risk of interruption to UK public services arising from supplier insolvency by requiring suppliers to provide Resolution Planning Information. It is aimed at central government departments, executive agencies and non-departmental public bodies, referred to as Relevant Authorities, and is likely to interest contracting authorities across the wider public sector.

The resolution planning guidance applies to new procurements of three types of contract, together called In-Scope Contracts: Critical Service Contracts (outsourced services categorised as Gold by the Cabinet Office Contract Tiering Tool, or otherwise designated critical after consulting the Cabinet Office Markets and Suppliers Team), other outsourced service contracts with an estimated value exceeding £10m per year, and Critical Construction Contracts. New in-scope contracts should include provisions requiring the supplier to provide CRP Information and an insolvency continuity plan. A separate strand of the guidance covers termination: before terminating any contract worth more than £5m per year with a Public Sector Dependent Supplier, authorities should liaise centrally, because ending one contract could undermine the supplier's solvency and its delivery of other public sector contracts. Model contractual provisions sit in the Cabinet Office Model Services Contract, with aligned drafting planned for model form public works contracts.

The six elements of resolution planning information

Resolution Planning Information splits into corporate level and contract level material. At corporate level, CRP Information has three elements. First, exposure: a list of the supplier's critical contracts with their criticality classification (Gold and Silver contracts under the Contract Tiering Tool) plus any Critical National Infrastructure contracts. Second, resolvability: a Structural Review explaining how the contracting entity depends on the rest of its group, operationally, legally and financially, and how it would be affected by an insolvency of the parent or key group members. This is due within 60 days of the contract becoming effective and updated annually or on a major corporate change or financial distress. Third, financial information: up to date key financials at group, contracting entity and shared services entity level, submitted within 40 days of annual results.

At contract level there are three further elements. The supplier prepares an insolvency continuity plan, focused on maintaining immediate and short-term service continuity when major dependencies may be interrupted, due within 40 days of the contract becoming effective. The supplier also prepares an emergency exit plan with exit information sufficient to enable an emergency re-procurement or transfer of assets in house or to a new supplier, due within three months. Finally the contracting authority prepares its own internal contingency plan for critical contracts, covering how it would maintain delivery, alternative suppliers and their appetite, whether to transfer or insource at short notice, governance, and, for public works, protection of the site, equipment and materials.

Who provides CRP information, and who holds it

The obligation to provide CRP Information falls on suppliers of new Critical Service Contracts, all Public Sector Dependent Suppliers of new service contracts worth over £10m per year where requested, and suppliers of Critical Construction Contracts. A Public Sector Dependent Supplier is one with annual revenue above £50 million of which more than half comes from the UK public sector, or a member of a group meeting that test; the Model Services Contract requires suppliers to certify annually whether they qualify. Suppliers, or parents, holding strong credit ratings (Aa3 or higher from Moodys, or AA minus or higher from Standard and Poors or Fitch) are exempt while those ratings hold, unless a Financial Distress Event arises.

The Cabinet Office Markets and Suppliers Team is responsible for obtaining, holding and assuring CRP Information for Strategic Suppliers, who submit contract information through Quarterly Returns, and it also holds and assures CRP Information for non-strategic suppliers, working with the relevant contracting authorities. To avoid duplication, one successful assurance satisfies further obligations on that supplier for the following 12 months, absent financial distress or a major corporate change. Confidentiality rules are strict: access is limited to a small named group unless a Financial Distress Event arises, and CRP Information must only ever be used to help maintain continuity of public works and services. It must not be used in contract negotiations over price or quality, must not be requested as part of bids, and is not a tool for assessing financial standing.

What contracting authorities should actually do

At the start of a procurement, the authority should establish the estimated annual value and use the Contract Tiering Tool to determine whether the contract is critical. Where the contract is in scope and not a framework call-off, it should state whether it is critical and include the standard obligations: CRP Information where appropriate, an insolvency continuity plan and exit information, and annual Public Sector Dependent Supplier certification. For call-offs, check whether the framework already carries the provisions; for new frameworks expected to exceed £10m per year or to include critical call-offs, the framework manager should build the obligations into the framework agreement. Special purpose vehicles are treated similarly, and where an SPV has sub-contracted substantial delivery, it should provide continuity and exit plans covering that sub-contractor. The provisions should be included from contract commencement even where the obligation only triggers later, to avoid renegotiation.

During the life of the contract, authorities should assure service-level plans themselves and notify the Markets and Suppliers Team that they exist, maintain internal contingency plans updated at least annually, and monitor the financial health of critical suppliers on an ongoing basis. When assuring information, cross-check it against audited accounts, probe dependencies on key sub-contractors, and consider spot tests: sampling the supplier's contract list against government records, asking for a dry run of the insolvency continuity plan, testing response to an emergency exit information request within contractual time limits, and rehearsing the authority's own response to a sudden insolvency notification. Timing matters: information must arrive before distress, because a struggling supplier will be focused on survival, not contingency planning for its own failure.

Wider protections, and why this matters

The guidance also surveys other mitigations, to be weighed against value for money. Standard protections in the model contracts include step-in rights, identification and approval of key sub-contractors, and assignment and novation provisions. Additional options include ring-fenced supplier entities (useful because insolvency happens by legal entity, but hard to achieve fully given delivery, shared services, finance, management and board dependencies on the wider group), guarantees and bonds (remedies after failure rather than supports for performance, with bonds generally suited to construction rather than services), escrow accounts and project bank accounts that protect the supply chain from a main contractor insolvency.

The reason all this matters is speed. An insolvency officer can terminate service contracts at short notice, and an interruption may be unacceptable where critical services, statutory duties, public safety or national security are engaged. Resolution planning does not prevent insolvency, and loss-making services may still be at risk, but it materially reduces the cost, duration and extent of interruption and enables an orderly transfer of responsibility, in house or to a new supplier.

How eSourcing Data helps

Resolution planning is, at heart, a discipline of knowing your contracts and keeping obligations current. eSourcing Data gives authorities a single structured record of their contract portfolio, values, durations and suppliers, which makes it straightforward to identify which contracts meet the in-scope tests, evidence criticality decisions and keep track of which agreements carry CRP, continuity plan and certification obligations.

Supplier management and reporting tools support the ongoing side of the guidance: recording annual plan updates and certifications, logging assurance activity and spot tests, and maintaining an auditable trail that shows reviewers and the Markets and Suppliers Team that resolution planning is in place and current. Because the platform also holds the procurement history, an emergency re-procurement starts from organised documentation rather than a scramble through old files.

What to do about it

1. 1Classify every new outsourced service or works procurement with the Contract Tiering Tool at the planning stage.
2. 2Include CRP Information, insolvency continuity plan, exit plan and annual Public Sector Dependent Supplier certification clauses in new in-scope contracts from commencement.
3. 3Check existing frameworks for resolution planning provisions before calling off, and build them into new frameworks over £10m per year.
4. 4Maintain and refresh internal contingency plans for every critical contract at least annually.
5. 5Monitor the financial health of critical suppliers continuously and inform the Markets and Suppliers Team of Financial Distress or Corporate Change Events.
6. 6Spot test resolution planning: dry run continuity plans, request emergency exit information against contractual deadlines, rehearse your own insolvency response.
7. 7Liaise centrally before terminating any contract worth over £5m per year with a Public Sector Dependent Supplier.