PPN 04/20 – further guidance on supplier relief owing to Covid-19

The Cabinet Office has published a further PPN on supplier relief during the pandemic. It builds on the provisions contained in PPN 02/20 (see our previous blog post) and sets out guidance for authorities developing transition plans to move away from the contractual relief provisions agreed at the start of the pandemic.

Immediate actions

Contracting authorities should review their contract portfolio to determine the following:

  • whether it is still appropriate to provide contractual relief measures to those offered relief at the start of the pandemic;
     
  • whether any relief measures granted continue to be appropriate. The PPN lists a number of ways in which relief may be offered, for example, payment against amended milestones or timescales, interim payments or advanced payments. As set out in PPN 02/20, for central government authorities, the requisite HM Treasury approval for advance payments has been granted in advance, capped at 25% of the contract value.  This consent has been extended until the end of October 2020;
     
  • develop a transition plan to end any supplier relief granted;
     
  • whether other contracts and supplies may now require contractual relief going to the continued impact of the pandemic;
     
  • continue to pay invoices as quickly as possible, targeting high-value invoices where there is a supply chain;
     
  • in all cases, keep a record of the decisions made.

Importance of transparency

The PPN continues to emphasise the importance of transparency. Authorities should continue to require that suppliers work on an open book basis, providing evidence that the supplier is not in receipt of receipt of multiple relief (for example, under the coronavirus job retention scheme), that staff have been paid the right amount on time, and the supplier’s supply chain has also been paid as quickly as possible.

Transition planning

The PPN acknowledges that by the end of October 2020, it hopes to wind down the economic support schemes it has put in place as people return to work. As part of this, the PPN states that the parties should work together to agree an eventual exit from the relief and transition to a new more sustainable operating model that reflects the changed situation owing to the pandemic.

Transition plans should include:

  • a planned exit date for when the agreed supplier relief will end, to be kept under review;
  • if advance payments have been made, clarity on when the outstanding goods or services should be delivered;
  • the process of reconciling payments made pursuant to any interim payment terms agreed;
  • an assessment as to whether the contract may require variation or termination as a result of the pandemic. Authorities will need to consider the application of the Public Contracts Regulations 2015 to any variations made and ensure that they are able to justify any changes to the contract in compliance with Regulation 72 (see our note on Regulation 72 on the Procurement Portal and CCS guidance on amendments to contracts).

The PPN does not seem to be suggesting that the parties may use this as an opportunity to renegotiate the contract more generally; reminding authorities and suppliers of its (non-statutory) guidance on behaving responsibly when reviewing contracts impacted by the pandemic. Authorities are encouraged to keep a comprehensive record of all decisions and actions taken, to support transparency and the future scrutiny of value for money.

The Outsourcing Playbook 2.0

Finally, PPN refers readers to the updated Outsourcing Playbook which contains updated guidance notes on how best to deliver public services.  This supersedes the original playbook published in February 2019, and provides new content on delivery model assessments, first generation outsourcing and how to maintain successful relationships with suppliers.

 

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