07.04.20

Cabinet Office moves to further protect suppliers after coronavirus

A new Procurement Policy Note (PPN) has been published by the Cabinet Office to further protect suppliers during and after the coronavirus outbreak.

Under this new PPN, contracting authorities must take action with immediate effect to ensure suppliers at risk can continue normal operations once the outbreak is over.

Suppliers at risk will continue to be paid as normal according to this PPN, even if the service is disrupted or temporarily suspended, until the end of June at the earliest.

Contracting authorities are being called on to introduce the most effective payment measures to support cash flow to the supplier, be this through forward ordering, pre-payment or payment on order.

Payments to suppliers should be judged on the average monthly payments over the previous three months, to ensure even when the contract requires payment by results, suppliers can continue to operate.

A provision of these new measures is that suppliers should work on an open book basis and make cost data available to contracting authorities, as well as continuing to pay employees and their subcontractors.

A Cabinet Office spokesperson said:

"During the exceptional circumstances created by coronavirus, it is clear that authorities may need to procure goods, services and works with extreme urgency.

"This is vital to make sure the public services we all depend on can continue and the public sector supply chain remains strong. That is why we have published new guidance informing authorities how this can be done.

"Even during these difficult circumstances however, it is important that public authorities continue to keep proper, detailed, records of their actions and work to achieve value for money and use good commercial judgement."

All contracting authorities are included in the PPN, which covers goods, services and works contracts in the UK.

It follows the announcement yesterday that the single transaction limit has been raised to £20,000 and the monthly limit has been raised to £100,000.

Both of these PPN guidelines are focused on ensuring the survival of suppliers during this period and beyond, including the retention of staff and the continuation of operations where possible.

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