Procurement Briefing: Publication of new PPN 04/20

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Procurement Briefing: Publication of new PPN 04/20

Published 16 junio 2020

Payment of Suppliers: Recovery and Transition from COVID-19: 1 July – 31 October 2020

On 9 June 2020, the Cabinet Office published Procurement Policy Note 04/20: Recovery and Transition from COVID-19 (“PPN 04/20”).

PPN 04/20 updates the guidance contained in the previous PPN 02/20 (Supplier Relief due to COVID-19) but acknowledges that the supplier relief provisions in PPN 02/20 may still be appropriate for certain at-risk suppliers delivering critical services (including suppliers that have not sought relief previously). However, it makes clear that suppliers are not automatically entitled to payment or other relief.

For Central Government organisations, payments in advance of need to secure continuity of supply of critical services can be made up to 25% of the total value of the contract. For all suppliers, there is still an emphasis in PPN 04/20 for authorities to accelerate prompt payment practices including targeting high value invoices where a prime contractor is reliant on a supply chain, resolving disputed invoices urgently and encouraging suppliers to invoice on a more regular basis to ease cash flow.

The plan now is for authorities and suppliers to work together to plan for an exit from any current relief being provided and look to how they can move to longer term, sustainable contracting. A transition plan should be agreed and implemented as soon as possible, but in any event, before 31 October 2020.

Where contracts are no longer viable, authorities and suppliers should look at options for termination based upon the terms of the existing contract. It cites the Outsourcing Playbook as offering guidance as to how authorities can engage constructively with suppliers.

Where contract requirements have changed significantly, contract variations should be considered in line with Regulation 72 of the Public Contracts Regulations 2015. DAC Beachcroft has available a training webinar: ‘What Contract Changes are Permitted by Procurement Law?’ recorded in partnership with the Crown Commercial Service Skills Academy that we would be happy to share with public sector procurement teams. Please get in touch with one of the contacts listed below to request a link to the recording.

Summary of actions for public authorities to take between 1 July and 31 October 2020:

  • Review contracts, including those where supplier relief is being provided, and where appropriate to maintain the delivery of critical services, continue or commence measures in line with PPN 02/20.
  • Continue to pay suppliers as quickly as possible to maintain cash flow and protect jobs.
  • Develop transition plans with suppliers, to exit from any relief as soon as reasonably possible.
  • Work openly and pragmatically with suppliers during the transition to ensure that contracts are still sustainable and can deliver value for money over the medium to long term.
  • Where contracts are no longer sustainable, look at termination options.
  • If operational requirements have changed significantly, agree contract variations in line with the Public Contracts Regulations 2015.
  • Keep comprehensive records of all decisions, reasons for decisions, and actions taken.

For further information, or to request a link to the webinar recording ‘What Contract Changes are Permitted by Procurement Law?’, please contact Mary, Hannah or Victoria. 

Authors

Mary Mundy

Mary Mundy

Leeds

+44 (0)113 251 4727

Hannah Chapelhow

Hannah Chapelhow

Newcastle

+44 (0)191 404 4121

Victoria Fletcher

Victoria Fletcher

London - Walbrook

+44 (0)20 7894 6658

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