BP, like its industry peers, rarely works in isolation – we need to work with suppliers, contractors and partners to carry out our operations

In 2012, 55% of the 402 million hours worked by BP were carried out by contractors.

Our ability to be a safe and responsible operator depends in part on the capability and performance of our suppliers, contractors and partners. We address this in a variety of ways, from training to requiring adherence to operational standards in legally binding agreements with our suppliers, contractors and partners. 

Our operating management system (OMS) includes requirements and practices for working with contractors. When we select contractors, our due diligence is designed to identify safety, environmental, bribery and corruption, money laundering and trade sanctions risks. We use systematic selection processes, which include pre-contract quality, technical and health, safety, security and environment audits for certain potentially high-consequence activity. 

We expect our suppliers, contractors and partners to comply with legal requirements and operate consistently with the principles of our code of conduct when they work on our behalf.

Following the Deepwater Horizon incident, we undertook an in-depth review of contractor management practices, with the aim of documenting and learning from the latest practices throughout BP and across a number of sectors and industries that use contractors in potentially high-consequence activities. The review confirmed to us the value of building long-term relationships with a limited number of contractors, supported by shared structures and common processes.

Initially our work has focused on contracts in our upstream supply chain involving potentially high-consequence activities. In 2012, we built on this work to identify contracts involving potentially high-consequence activities across the group and bringing a consistent level of oversight, including by members of the executive team, to the management of these contracts as a priority. In our global projects organization, we have put in place global agreements with seven suppliers for plant inspection and surveillance services, covering the work previously undertaken by more than 60 suppliers.

The review also highlighted the importance of clearly defined responsibilities and decision rights at every stage of each process – including training, monitoring and auditing – as well as rigorous qualification of suppliers, such as demonstration of the competency of their key personnel. In 2012 we have focused, including through our OMS, on practical assistance to operational line management to build competence in this area, including targeted training in our Upstream business for managers with contract accountabilities.

In 2013 we plan to continue our work on the management of contractors through our OMS framework and actions related to additional supplier audits, competence testing and other programmes.

Managing risks in the supply chain

We identify and manage risks in the supply chain relating to safety, corruption and money laundering, and aim to have certain sustainability-related provisions in our contracts with suppliers and contractors. We also undertake various initiatives with regard to local content development and encourage our contractors to do the same.

Our joint venture partners

We seek to work with companies that share our commitment to ethical, safe and sustainable working practices. However, we do not control how our co-venturers and their employees approach these issues.

Typically, our level of influence or control over a joint venture is linked to the size of our financial stake compared to other participants. In some joint ventures we act as the operator. Our OMS provides that where we are the operator, and where legal and contractual arrangements allow, OMS applies to the operations of that joint venture.

In other cases, one of our joint venture partners may be the designated operator, or the operator may be an incorporated joint venture company owned by BP and other companies. In those cases our OMS does not apply as the management system to be used by the operator, but is available to our businesses as a reference point for their engagement with operators and co-venturers. Where BP does not have overall control of a joint venture, we will do everything we reasonably can to make sure joint ventures follow similar principles.

We piloted a draft group policy in 2012 intended to promote consistency in identifying, characterizing and reporting BP’s exposure from new and existing non-operated joint ventures and in how the management of that exposure is documented. We expect to issue the policy, which covers safety and operational risk, as well as bribery and corruption risk, in 2013.