Like our industry peers, we rarely work in isolation - we need to work with contractors, suppliers and partners to carry out our operations
Our ability to be a safe and responsible operator depends in part on the capability and performance of those who help us carry out our operations. We therefore work with our supply chain on areas such as safety, operational performance, anti-bribery and corruption, money laundering and human rights. We seek to work with companies that share our commitment to ethical, safe and sustainable working practices. We expect and encourage our contractors and their employees to act in a way that is consistent with our code of conduct. And, our operating management system (OMS) includes requirements and practices for working with contractors.
In 2015 52% of the 353 million hours worked by BP were carried out by contractors (2014 52%, 2013 54%). We focus on developing deeper, longer-term relationships with selected contractors. This helps us to take advantage of economies of scale and manage risks. We have global agreements in areas such as equipment, well services, engineering design and supply of key retail assets. We seek to set clear and consistent expectations of our contractors. Our standard model contracts include health, safety, security and environmental requirements. Bridging documents are necessary in some cases to define how our safety management systems and those of our contractors will co-exist effectively.
Potentially high-consequence activity
Contracts involving work that could result in the most serious risks, according to their potential impact and probability, demand our highest scrutiny. Our selection process for these contractors includes pre-contract quality, technical and health, safety, security and environmental audits that are carried out on a risk-prioritized basis. We continue to strengthen our process for working with these contractors in our upstream businesses. This includes plans that address health, safety and environmental management, contractor self-verification, BP oversight, key performance measures and joint performance review meetings.
We are keen to learn from our contractors and share our experiences. We hold workshops with senior executives from BP and our suppliers to provide opportunities for engagement. For example, in 2015 we hosted a forum for our upstream strategic suppliers, where we discussed how to effectively collaborate in areas such as operational safety, increased efficiency in a lower oil price environment and safe and reliable operations. We are working with Maersk Training to provide additional training opportunities via an immersive simulation environment. This allows BP employee and contractor drilling teams to practice working as an integrated unit.
Our approach is to work collaboratively with contractors in a way that seeks to avoid the need for intervention. Where contractors do not meet our requirements, they may be put on a performance improvement plan. For example, following poor performance in key areas, we placed an engineering contractor on a performance improvement plan until we observed clear improvement. During this time, we awarded no additional contract work and met regularly with the contractor in order to measure progress. In some instances, we will dismiss contractors that do not meet our requirements, or are unable to demonstrate improved performance.
Q: How do you confirm that BP’s contractors are working safely and in a way that is consistent with BP’s standards?
A: Our role is to oversee and be confident that our contractors are following the relevant procedures and management system requirements. In Upstream, we have established a robust system for our third-party contractors who undertake the most high-risk activity on our behalf. It allows us to set expectations, oversee activities and share best practices. As a result, we have seen a greater sense of ownership and improved operating discipline among contractors performing potentially hazardous activity. We also meet regularly with the leadership of our suppliers and contractors to agree how we can work together to improve performance. We held two global safety forums with our upstream contractors in 2015 and I am encouraged by their level of commitment to take safety to the next level. While we have taken steps to improve our operating discipline, roughly 70% of our operations work is carried out by third-party contractors. So it is imperative we keep communication channels open and work collaboratively with our contractors to drive rigour and disciplined behaviour in support of safe and compliant operations.
Fawaz Bitar, head of global operations organization, BP
Anti-bribery and corruption
Our code of conduct explicitly prohibits engaging in bribery and corruption in any form. Before working with suppliers, we conduct assessments in order to determine the degree of bribery and corruption risk they pose and to carry out checks once contracts are in place.
We work with local suppliers where possible, building the skills of local businesses in order to further develop the supply chain. In Egypt, where we have a successful track record stretching over 50 years, we spent more than $365 million with local companies in 2015.
We seek to make contractual commitments with suppliers that encourage them to adhere to the principles contained in our human rights policy. Most of our standard model contracts now include requirements for our suppliers to respect internationally recognized human rights in their work for BP. In some locations, we also conduct social performance audits, which cover issues such as forced labour, working hours and conditions and compensation. Our downstream business conducted 28 audits in 2015 to assess potential suppliers as part of our pre-qualification process.
Our joint venture partners
We have a group framework for identifying and managing BP’s exposure related to safety, operational, and bribery and corruption risk from our participation in non-operated joint ventures. The framework is helping us to assess risks before making investment decisions and to monitor these on an ongoing basis. Around 46% of our upstream production and 13% of our refining capacity in 2015 were from joint ventures where BP is not the operator. Typically, our level of influence or control over a joint venture is linked to the size of our financial stake. Our OMS applies to the operations of joint ventures only where we are the operator. In other cases, one of our partners may be the designated operator. In those cases our OMS does not apply as the management system to be used by the operator, but is generally available as a reference point for BP businesses when engaging with operators and co-venturers.