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Changes to procurement policy: Supplier relief due to COVID-19

Businesses of all sizes are feeling the impact of the coronavirus pandemic, and on March 20th the Cabinet Office issued reassurance to suppliers with the Procurement Policy Note: Supplier relief due to COVID-19. The document serves as guidance for public sector bodies on protecting suppliers, their workforce and supply chains, helping to ensure service continuity now and into the future. 

The policy changes have been put in place with immediate effect until 30 June 2020, and the key actions are:

  • Urgent review of 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/prepayment, 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. 
  • 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.  
  • 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. 

As a supplier, the final point highlights that during this period, you will need to work collaboratively and ensure there is full transparency and operate on an ‘open book’ basis. This means you should share data if requested, to demonstrate the payments you receive have been used in the manner intended.  

The PPN provides full details of how public sector bodies are to respond to issues that will affect contract delivery and are a direct result of COVID-19.

Click here to read the full PPN on GOV.uk

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