COVID-19 – Government procurement guidance

COVID-19 – Government procurement guidance

Procurement Policy Note 01/20: Responding to COVID-19

In these exceptional circumstances, it’s clear that authorities may need to procure goods, services and works with extreme urgency. PPN 01/20 provides a timely reminder that the procurement rules already provide for procurement procedures with accelerated timescales, and for direct awards, for reasons of extreme urgency. This means negotiations can be undertaken without prior advertisement.  The ‘accelerated’ open procurement procedure already allows the award of a contract within as little as ten days.

However, it is worth remembering that the ‘extreme urgency’ justification does not provide carte blanche to appoint a supplier by way of a direct award. There must be a causal link between the unforeseeable event (i.e. COVID-10 pandemic) and the resulting extreme urgency to appoint quickly due to it being impossible to apply the timescales in the procurement rules.

Procurement Policy Note 02/20: Supplier relief due to COVID-19

PPN 02/20 by contrast, provides an eye-catching announcement; It sets out information and guidance for public bodies to use the power of procurement to provide economic support to their supply chain to ensure service continuity during, and after, the current COVID-19, outbreak. . The guidance provides, in summary, that contracting authorities should continue to pay suppliers who are at risk and be more lenient in their payment terms. The guidance provides that 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/prepayment, interim payments and payment on order, not receipt);
  • make payment on the basis of previous invoices if the contract involves ‘payment by results’;
  • agree to act on an open book basis and make cost data available to the contracting authority during this period. Supplies should continue to pay employees and flow down funding to their subcontractors; and
  • ensure invoices submitted by suppliers are paid immediately on receipt, in order to maintain cash flow in the supply chain and protect jobs.

What should institutions do now?

Institutions should undertake a review of their contracts, rather than a wholesale change in their contracts, and, suppliers should reciprocate in a spirit of openness and pass payments down through the supply chain as quickly as possible.

These notices raise all sorts of questions about the nature of the relief afforded to suppliers, the terms on which this complies with the procurement rules and the risk of possible challenge. But those questions feel like matters for another day…

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