Qualifications and Standards Required of Suppliers

At a glance

  • The standards that extractive companies set for their suppliers play a large role in deciding the extent of local procurement.

  • It is important that the details of bidding processes, too, be openly communicated to local businesses and that their participation be encouraged.

Case Studies

Key Resources

Topic Briefing

To increase the participation of local businesses in the supply chain, extractive industry companies need to ensure that the bidding process accommodates local suppliers. Critically, and in all cases, it also involves creating an open and transparent system for communicating with suppliers.

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Extractive companies have several options for encouraging local supplies to engage in the bidding process. These include:

  • Using a prioritization matrix for local businesses when soliciting tenders for goods and services.

  • Creating a system of accreditation of suppliers to verify they are “local” (based on business registration, ownership, or employee participation levels).

  • Using a different scoring sheet for local suppliers (for example, different scores for local suppliers related to price, service, safety, environmental practices as well as for technical requirements such as ISO standards).

  • Reviewing anticollusion mechanisms as well as taking steps to guard against corruption.

  • Unbundling contract sizes, and encouraging third-party contractors to do so, to permit the participation of local businesses.

  • Adjusting methods of communication with local businesses about available opportunities, such as the accommodation of paper submissions in addition to submissions through supplier portals (see Supplier Portals), and offering assistance to ensure local participation, including by translating information on tenders into the local language. For example, the Expression of Interest page for opportunities at Rio Tinto’s Oyu Tolgoi mine is available in both English and Mongolian.

  • Setting up dedicated teams to simplify the tender process to reduce barriers and to improve communication about upcoming tenders. Examples of communication include the disclosure of reasons for not awarding a contract to local suppliers, and a mechanism for facilitating the interaction of local suppliers with a company’s procurement department.

All of the methods mentioned above, found in the Key Resource “A Guide to Getting Started in Local Procurement”  (pages 31-32, and page 37) help facilitate the connection between extractive companies and potential local suppliers. The appropriate methods depend on the government’s local content policies and the specific country context.