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.
On March 18th, the government acknowledged the strain on the public sector by making changes to procurement policy, and ensuring resources can be sourced as a matter of urgency.
These policy changes allow for the following:
direct award due to extreme urgency;
direct award due to absence of competition or protection of exclusive rights;
call off from an existing framework agreement or dynamic purchasing system;
call for competition using a standard procedure with accelerated timescales;
extending or modifying a contract during its term.
What does this mean for suppliers?
If buyers can demonstrate that they have an ‘extreme urgency’ for goods, services or works, and/or there are no other suitable suppliers, they can enter into contracts without competing or advertising as long as they have satisfied several criteria categories. On top of this, buyers also have the ability to make changes or extend existing agreements.
For accelerated timescales, you will have to pay very close attention to tender notices:
Check your tender alerts thoroughly.
Make sure you have the people and resources needed to complete your bid.
Ensure your pricing strategy works for your business.
Check you have addressed all the key criteria.
For suppliers providing ‘non-urgent’ goods and services
Despite uncertainty with other industries, the public sector will always have a requirement for goods and services. In the last week, the number of tender notices published for the UK was 1613, which is not far off the weekly average of 1664 seen in 2019. Looking across the UK, ROI and EU, there are around 25,000 live notices.
There is reassurance in knowing that there is still a drive to maintain normality during such unprecedented circumstances. We will be keeping a close eye on these figures and letting you know if there are significant changes and providing you with more insight into the sectors that may be affected.
We hope your workplace has not been affected too dramatically by the unprecedented situations caused by COVID-19.