Which supplier checks should be conducted in the public sector and why?
In the public sector, supplier checks are especially critical because procurements are funded by taxpayers' moneyand the trust in public authorities must be maintained. Strict regulations govern public procurement, competition, and transparency, which all public sector entities must comply with.
Which supplier checks should be conducted?
To ensure that a supplier is legitimate and reliable, the following checks should be carried out:
1. Company status and registration
Verification of whether the company is registered and active, and that it is not undergoing bankruptcy or liquidation. Entering into contracts with a company that is close to bankruptcy can result in delays and financial losses.
2. Financial stability and creditworthiness
Analysis of the company’s financial statements, revenue, payment history, and outstanding debts or payment defaults. Suppliers with weak finances may struggle to fulfill their commitments, which can negatively impact critical public services.
3. Ownership structure and beneficial owners
Identification of who owns and controls the company by checking for beneficial owners. Unreliable suppliers may hide their owners to evade responsibility or conceal links to high-risk individuals.
4. Tax and social security liabilities
Verification of whether the company has unpaid taxes or social security contributions. According to the Public Procurement Act (LOU), companies with tax debts may be excluded from public tenders.
5. Links to sanctioned individuals or companies
Checking whether the company or its owners appear on sanctions lists from the EU, UN, or other international organisations. Engaging with sanctioned entities can lead to legal consequences and harm the reputation of the public authority.
6. Environmental and sustainability requirements
Review of the supplier’s sustainability policies, environmental certifications, and compliance with environmental laws. The public sector must procure sustainably and minimise environmental impact.
7. Labour law and social standards
Verification that the supplier complies with labour laws and is not linked to unethical labour practices or forced labour. Authorities must not collaborate with companies that violate labour laws or fail to meet fair employment standards.
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