Additional Guidance on Supply Chains

This guidance is intended to provide more clarity on:

The Standard Bidding Documents’ requirement to “monitor primary suppliers on an ongoing basis in order to identify any significant changes in these suppliers. If new risks or incidents of forced or child labor are identified, the Consultant/Contractor shall take appropriate steps to remedy them”; and
Consultants/Contractors’ requirement to ensure their suppliers provide laborers with a safe and hygienic workplace.

Supply chains are increasingly multi-tiered and complex, which, in turn, increases the level of risk exposure. In general, the most significant labor and working condition risks related to supply chains in MCC and MCA projects include:

Forced labor: Forced labor includes any kind of involuntary or compulsory labor, such as indentured labor, bonded labor or similar labor arrangements, slavery and slavery-like practices. Bonded labor is labor that is required in order to pay off a debt. The level of the debt as a ratio to money credited for work is such that it is impossible or very difficult to ever pay off that debt. Forced labor also includes requirements of excessive monetary deposits, excessive limitations on freedom of movement, excessive notice periods, substantial or inappropriate fines, and loss or delay of wages that prevent workers from voluntarily ending employment within their legal rights. Migrant workers are typically most vulnerable to these types of arrangements.
Child labor: Child labor consists of work by children that is economically exploitative or likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral, or social development. Certain types of work performed by children may be acceptable, but only when carried out in a manner that is both legal and safe. Where applicable laws do not specify a minimum age, children aged below 15 are not employed to perform work under MCC contracts. Where applicable laws diverge from this specified age standard, the higher age should apply. Children under the age of eighteen (18) will not be employed in hazardous work or more than 40 hours per week. All work of persons under the age of eighteen (18) will be subject to an appropriate risk assessment and regular monitoring of health, working conditions, and hours of work. Under no circumstances should children perform work that is 1) economically exploitative; 2) likely to be hazardous or to interfere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral, or social development; or 3) illegal, even if such practices are socially or culturally acceptable in the sector, country or region.
Occupational health and safety (OHS) risks: OHS refers to the range of endeavors aimed at protecting workers from injury, illness or impacts of mutagenic or teratogenic agents associated with exposure to hazards encountered in the workplace or while working. Hazards may arise from materials (including chemical, physical and biological substances and agents), environmental or working conditions (such as excessive hours of work, night work, mental or physical exhaustion, oxygen deficient environments, excessive temperatures, improper ventilation, poor lighting, faulty electrical systems, working at heights, un-shored trenches, etc.), or work processes (including, but not limited to, tools, machinery and equipment). OHS practices include the identification of potential hazards and responses including design, testing, choice, substitution, installation, arrangement, organization, use and maintenance of workplaces, working environment and work processes to eliminate sources of risk or minimize workers’ exposure to them.

MCA-[Country Name] and MCC expect that Consultants/Contractors will develop a supplier management program that will allow them to monitor primary suppliers on an ongoing basis to identify any significant changes and to mitigate against such risks as described above. This process typically entails the following measures:

Policies: Develop Codes of Conduct and policies for suppliers incorporating minimum requirements that all suppliers are expected to meet.
Identification: Identify potential suppliers that may meet contractual needs.
Vetting: A pre-qualification process that vets prospective suppliers based on having adequate systems in place and positive historical performance.
Contracts: Issue contracts with suppliers that have compliance clauses to ensure adequate systems are in place.
Monitoring: A monitoring and compliance program which includes reporting requirements and audits.

For additional guidance, please refer to:

Company Resources by Know the Chain: A compilation of resources for companies that includes best practices related to management systems, audit and assessment methodologies, and white papers on evolving regulatory frameworks related to supply chains.
Responsible Sourcing Tool: This tool was developed in collaboration with the State Department’s Office to Monitor and Combat Trafficking in Persons, Verité, Made in a Free World, and the Aspen Institute. It is a tool created to help visualize and understand the risks of human trafficking in supply chains as well as the mechanisms to implement effective management systems to detect, prevent, and combat trafficking.
Sedex Supplier Workbook: This workbook is a guide to help suppliers understand labor and working condition best practices—in this case related to the Ethical Trading Initiative Base Code—and how they can align their operations to these practices.