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Government issues procurement policy note on paying suppliers during coronavirus outbreak

The Cabinet Office has issued a procurement policy note (PPN) setting out information and guidance for public bodies on payment of their suppliers to ensure service continuity during and after the COVID-19 outbreak.

It tells contracting authorities that they "must act now to ensure suppliers at risk are in a position to resume normal contract delivery once the outbreak is over".

The PPN, which can be viewed here, says all contracting authorities should:

  • Urgently review their contract portfolio and inform suppliers who they believe are at risk that they will continue to be paid as normal (even if service delivery is disrupted or temporarily suspended) until at least the end of June.
  • Put in place the most appropriate payment measures to support supplier cash flow; this might include a range of approaches such as forward ordering, payment in advance/pre-payment, interim payments and payment on order (not receipt).
  • If the contract involves payment by results then payment should be on the basis of previous invoices, for example the average monthly payment over the previous three months.
  • To qualify, suppliers should agree to act on an open book basis and make cost data available to the contracting authority during this period. They should continue to pay employees and flow down funding to their subcontractors.
  • Ensure invoices submitted by suppliers are paid immediately on receipt (reconciliation can take place in slower time) in order to maintain cash flow in the supply chain and protect jobs.

The Cabinet Office says the PPN is applicable to all contracting authorities, including central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector (excluding Devolved Administrations).

The PPN, which covers goods, services and works contracts being delivered in the UK, is to have immediate effect until 30 June 2020.

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