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Published 7 October 2020
The Guidance follows a Procurement Policy Note on supplier relief due to COVID-19 issued by the Cabinet Office which set out the steps that public authorities (including NHS Trusts) should take to ensure that suppliers at risk were in a position to resume normal contract delivery once the COVID-19 outbreak was over. The Cabinet Office has more recently issued a further Procurement Policy Note on recovery and transition from COVID-19 which provides information for public authorities on reviewing their supplier relief measures and working towards an eventual exit from relief.
The Guidance advises NHS Trusts on the different COVID-19 related costs that are recoverable by suppliers and how those claims should be assessed. Examples of the type of suppliers who may be eligible to claim COVID-19 related costs include linen and laundry suppliers, car park providers and those providing retail services. The Guidance anticipates that the type of costs incurred may include additional staffing costs and sick pay. However, as a general principal, suppliers and NHS Trusts must fully consider all opportunities to mitigate costs and consider any offsets against services not provided. Suppliers are also expected to present their costs on an open book basis to ensure that there is no double counting.
If suppliers’ claims meet the criteria in the Guidance then NHS Trusts may be able to reclaim the costs paid. At the moment, the Guidance only relates to costs that suppliers incurred between 20 March and 30 June 2020 (with costs pre-dating 20 March only being accepted by specific agreement and supported by evidence), but it is possible that further extensions to this period will be made.
There are multiple issues for NHS Trusts to take into account when assessing a claim for COVID-19 related costs, depending on the services provided by the supplier and the type of losses claimed. They may need to consider both national and local advice on the impact of COVID-19 as well as any applicability of their contract terms with the supplier. They may also need to consider the performance of the contractor under the terms of their contract and determine whether, if the contractor has not been performing, this is as a result of the impact of COVID-19. Whilst the Public Procurement Notices issued by the Cabinet Office have focussed on supporting suppliers at risk (i.e. suppliers who will struggle to meet their contractual obligations due to the impact of COVID-19 putting their financial viability, ability to retain staff and supply chains at risk), the Guidance is also clear that support should not be provided for non-performing suppliers as a result of non COVID-19 causes. In these circumstances, NHS Trusts can continue to operate their contractual remedy rights (although Trusts should still take into account the supplier’s ability to respond due to COVID-19).
PFI contracts and contracts involving numerous sub-contractors (particularly in facilities management contracts) may bring additional levels of complexity to any claim for COVID-19 costs. NHS Trusts may need advice on conflicting contract terms or on responding to competing claims from multiple sub-contractors. DAC Beachcroft is experienced in advising on complex PFI and FM contracts, disputes between suppliers and NHS Trusts and on the validity of claims made under the Guidance. For more information on how we can help, and to discuss our fixed fees, please contact Vanessa Taylor Byrne or Betul Milliner.
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