The Cabinet Office has released a Procurement Policy Note (PPN) 02/20 which has been enacted with immediate effect and will be in place until 30 June 2020, to provide relief for suppliers during the current coronavirus pandemic. This article briefly explains its key components, who is to benefit and how.
What does this PPN aim to achieve?
This PPN is designed to ensure that suppliers providing services to public bodies are able to fulfil their contracts during and after the coronavirus outbreak; suppliers will continue to be paid until at least the end of June irrespective as to whether delivery of that service is disrupted or suspended. It is also important to note that this PPN does not amend or suspend the public procurement regime.
To whom does it apply?
This PPN applies to all contracting authorities including central government, local authorities, the NHS and non-departmental public bodies.
The Crown Commercial Service has indicated that Social Housing Providers can determine whether or not the PPN applies at their own discretion. We envisage that given their legal status as “public sector” organisations and the fact that they receive public funding, some may reasonably conclude that the PPN does apply and proceed to implement relevant measures.
What are the key action points for contracting authorities and suppliers to whom this PPN may apply?
- All contracting authorities should assess which suppliers are likely to be at risk due to the outbreak. Payment measures to support supplier cash flow (i.e. payment against revised/extended milestones, interim payments, forward ordering or prepayment etc.) should be put in place. It is paramount that all payments to suppliers are prompt.
- Suppliers should continue to pay their employees throughout this period. Action will be taken to recover payments should suppliers be found to be taking undue advantage of this policy.
- If advance payments are deemed necessary by the contracting authority to secure continuity of the supply of critical services, they may advance up to 25% of the contract value to the supplier.
- Commercial flexibilities contained within the contract should be exercised where possible to accommodate continued supply.
- In the event that the supplier is prevented from performing its contractual obligations by a government decision, the contacting authority should seek to re-deploy the capacity of the suppliers to other areas of need.
- Contingencies should be implemented to counterbalance the high levels of absent staff (e.g. delegating authority to receive funds to ensure prompt receipts and authorisations of payments and ensuring clear instructions with regards to sending invoices, payment details etc.).
- All temporary changes must be recorded, preferably in writing; after the outbreak the original terms of the contract will resume.
What are the consequences of non-compliance?
The PPN does not impose any sanctions for non-compliance, however, suppliers are entitled to make a complaint to the Cabinet Office’s Public Procurement Review Service. Contracting authorities should be aware that the reputational impact of not adhering to this PPN may be detrimental, particularly in the context of the present circumstances.