PPN 007 on contracts with suppliers from Russia and Belarus: the official guidance, explained

The key facts

• The PPN was originally issued in August 2022 and updated in February 2025 to reflect the terminology of the Procurement Act 2023 and the Procurement Regulations 2024.
• It applies to central government departments, their executive agencies and non-departmental public bodies awarding public contracts other than special regime contracts, and to best value authorities and parish councils in England.
• In-scope organisations should note the provisions from 24 February 2025. For procurements commenced and contracts awarded before that date, PPN 01/22 applies.
• The February 2025 update is not a change of policy or a new call for action, and organisations do not need to repeat reviews they already completed, for example a contract portfolio review carried out in 2022.
• A Russian or Belarusian prime contractor means an entity constituted or organised under the law of Russia or Belarus, or an entity elsewhere that is controlled by an entity based in Russia or Belarus, including through Persons of Significant Control.
• A Person of Significant Control or beneficial owner holds more than 25 per cent of shares, more than 25 per cent of voting rights, or the right to appoint or remove the majority of the board.
• Contracts should only be terminated where there are suitable termination provisions, criticality and alternative supply have been assessed, and financial implications have been assessed and mitigated.
• Where a supplier is a UK supplier or a treaty state supplier, it should not be automatically excluded from a new procurement because the non-discrimination provisions of the Procurement Act 2023 apply.

What this PPN is and who it applies to

PPN 007 is the government's standing instruction to public buyers on how to handle contracts and bids involving suppliers from Russia and Belarus. It was first issued in August 2022 in response to the invasion of Ukraine and the sanctions that followed, and it was updated in February 2025 so that its language matches the Procurement Act 2023 and the Procurement Regulations 2024.

The in-scope organisations are all central government departments, their executive agencies and non-departmental public bodies when awarding public contracts for goods, services or works, other than special regime contracts. Best value authorities within the meaning of section 1 of the Local Government Act 1999 and parish councils in England are also in scope. Other public sector contracting authorities are asked to consider applying the same approach.

The PPN should be applied to all contracts, above and below the thresholds set out in the Procurement Act 2023, where it is relevant and proportionate to do so. In-scope organisations should note its provisions from 24 February 2025. Where a procurement commenced or a contract was awarded before that date, including under frameworks, dynamic purchasing systems or qualification systems established under the previous legislation, the earlier note, PPN 01/22, is the reference point.

What the PPN requires you to do

The core action is a review of the contract portfolio to identify any contract where the prime contractor is a Russian or Belarusian supplier. Where one is found, the organisation should consider terminating that contract in accordance with the terms of the contract and through a legally compliant process. Termination should only proceed if an alternative supplier can be sourced in line with value for money and affordability, and with minimal disruption to public services.

The definition matters. A Russian or Belarusian prime contractor is either an entity constituted or organised under the law of Russia or Belarus, or an entity registered in the UK, with substantive UK business operations, or based in another country, that is controlled by an entity based in Russia or Belarus. Control includes a parent company or Persons of Significant Control, defined as holding more than 25 per cent of shares, more than 25 per cent of voting rights, or the right to appoint or remove the majority of the board of directors.

The PPN sets three preconditions for considering termination: suitable, commercially acceptable termination provisions in the contract; an assessment of the criticality of the contract and the availability and affordability of alternative providers; and an assessment of the financial and other implications of termination, with those implications mitigated. The accompanying guidance offers example risk methodologies, rating business criticality and financial implications from low through to very high, where very high covers a risk to life or public wellbeing, or a termination payment greater than the remaining payments due under the contract.

Governance is explicit. Assessments must be documented and recommendations approved by the appropriate senior commercial or procurement leader, which in central government means the Commercial Director. Accounting officers approve the final decision, and HM Treasury consent must first be obtained for transactions that are novel, contentious, precedent setting or that could cause repercussions elsewhere in the public sector, in line with Managing Public Money. In local government, recommendations go to the most senior commercial or procurement professional and to the S151 Officer, Chief Financial Officer or Responsible Financial Officer.

New procurements and the limits of exclusion

For new procurements, buyers may decline to consider, or otherwise exclude, bids from suppliers constituted or organised under the law of Russia or Belarus, or whose Persons of Significant Control information states Russia or Belarus as the place of residency. That freedom stops where the supplier, or any member of the supply chain relied on to deliver the contract, is a UK supplier or a treaty state supplier.

Where the supplier is a UK supplier or a treaty state supplier, it should not be automatically excluded, because the non-discrimination provisions of the Procurement Act 2023 apply. Complex group structures, for example a chain involving parent or group companies that are UK or treaty state suppliers, need specific consideration and, where appropriate, legal advice.

Verification is a due diligence exercise rather than a paperwork tick. The PPN asks organisations to check supplier details with Companies House and other open information sources, or to seek verification directly from the supplier. The accompanying guidance notes that much of this should already have been captured in the information suppliers uploaded to the central digital platform, but that further verification may still be needed.

What it changes and why it matters

The February 2025 update does not create a new obligation. Its practical effect is to bring an established policy into the language of the current legal regime so that teams working under the Procurement Act 2023 are not left applying instructions written for the Public Contracts Regulations. If a contract portfolio review was completed in 2022, it does not need to be repeated now, but the ongoing obligations still stand.

The other significant piece is the local government position. The Local Government (Exclusion of Non-commercial Considerations) (England) Order 2022, which came into force on 1 July 2022, disapplies the prohibition in section 17(5)(e) of the Local Government Act 1988 in respect of Russia and Belarus. That means the fact a supplier is Russian or Belarusian, previously a non-commercial consideration that councils could not take into account, can now be weighed by best value authorities and parish councils in England when awarding or terminating contracts in scope of this PPN.

The PPN is careful about the scale of the exposure. It notes that the public sector's exposure to Russian and Belarusian suppliers is primarily in energy markets, where prices have fluctuated significantly and the market is considered volatile, and it requires advice from an energy expert or a relevant public sector buying organisation before terminating an energy supply contract.

Applying it in practice

Take a proportionate, risk-based approach. The guidance says the focus should be on major contracts and those which could have the most impact and influence on the Russian or Belarusian regimes, not on an exhaustive sweep of every purchase order. Full supply chain mapping is not required, though you should have enough information to identify and assess risk.

Work the assessment in a set order: review termination provisions and early termination costs, confirm there are no intellectual property complications such as prime contractor ownership of IP, consider resilience issues with any Russian or Belarusian subcontractors, then establish whether alternative supply exists. When testing alternative supply, estimate the timescale to secure it, weigh switching cost and mobilisation time, satisfy yourself that the alternative does not result in any form of payment to Russian or Belarusian suppliers, and check that terminating one contract will not put other contracts with the same supplier at risk.

When you do terminate, follow the contractual process precisely. Longer notice periods, or clauses allowing termination without cost, should be preferred, both because they are cheaper and because they give time to secure replacement supply. Where termination is not feasible on a volume-based contract, reducing volume to zero could achieve the same effect. Quantify the additional costs up front, including commodity price changes, market engagement, tendering and legal support, and confirm the funds are approved and available.

Finally, keep the record. The guidance is unambiguous that all decision making, whether or not it results in termination, should be clearly documented with an audit trail to support the decision. It also notes that the Procurement Act 2023 requires publication of a contract termination notice where the procurement that resulted in the contract commenced on or after 28 October 2024, and treats updating the relevant Contracts Finder notice as good practice for older contracts.

How eSourcing Data helps

The hardest part of this PPN is not the policy, it is knowing what you actually hold. eSourcing Data gives procurement teams a single structured view of the contract portfolio, with supplier records, contract values, expiry dates and termination-relevant metadata in one place, so a portfolio review can be run as a filtered query rather than a spreadsheet exercise across a dozen owners. Supplier records can carry the ownership and Persons of Significant Control information you have verified, so the same check does not have to be repeated by every category team.

Because the PPN turns on documented decisions and approvals, the audit trail matters as much as the outcome. eSourcing Data records the assessment, the risk ratings applied, the recommendation and the approval chain against the contract, so that when a Commercial Director, accounting officer or S151 Officer is asked why a contract was or was not terminated, the reasoning and its date are retrievable rather than reconstructed from email.

For new procurements, the platform supports the practical mechanics: capturing supplier basic information and supply chain declarations at selection, flagging bids that need a treaty state check before any exclusion decision is taken, and generating and tracking the notices the Procurement Act 2023 requires, including contract termination notices. It supports below-threshold workflows in the same way, which matters here because the PPN applies above and below threshold wherever it is relevant and proportionate.

What to do about it

1. 1Confirm whether your organisation is in scope, and whether the contract portfolio review required when the PPN was first issued in 2022 was completed and evidenced.
2. 2Run a proportionate, risk-based review focused on major and high-impact contracts to identify Russian or Belarusian prime contractors, using Companies House and other open sources plus supplier-provided information.
3. 3For each contract identified, review termination provisions, early termination costs, IP ownership and the availability, cost and lead time of alternative supply.
4. 4Rate business criticality and financial implications using the example methodologies in the guidance, and mitigate the identified implications before recommending action.
5. 5Route documented recommendations to the Commercial Director or equivalent, and to the accounting officer, S151 Officer or Chief Financial Officer, and obtain HM Treasury consent where the transaction is novel, contentious or precedent setting.
6. 6Seek expert advice before touching any energy supply contract, and take legal advice on the specific termination clauses in play.
7. 7For new procurements, build a treaty state and UK supplier check into the process before any decision to decline a bid, and publish a contract termination notice where the Procurement Act 2023 requires one.