On 20th March the government released the second Procurement Policy Notice (PPN) of the year in response to the outbreak of COVID-19. PPN 02/20 provides guidance to contracting authorities to review their contracts and ensure service continuity by financially supporting those suppliers that are struggling to remain financially stable due to the outbreak of COVID-19. This covers contracts for goods, services and works, and has immediate effect until 30th June, at which point these measures may be extended further.
Authorities should take the following steps to ensure the business continuity of their suppliers:
- Review all of their contracts and establish which suppliers are at risk of financial difficulty if they do not continue to receive payment.
- Confirm with these suppliers that they will continue to pay them until at least the end of June. In general, this confirmation should override contractual provisions that allow the authority to reduce their payments to the supplier (e.g. force majeure clauses or deduction of service credits).
- Ensure that there are measures in place to allow payments to be made as quickly as possible and making invoicing requirements available on the authority’s website.
The contract to which these measures apply should be varied. Authorities should consider the following points for any such variation:
- Any variation should make clear that these measures only relate to the outbreak of COVID-19, are for a limited period and provide for a review procedure.
- Include provisions for suppliers to conduct open book accounting during this period to ensure transparency between the parties.
- If the supplier is unable to continue providing their usual service, goods or works under the contract and therefore have staff available, authorities should seek to re-deploy these staff to other areas of need.
We have extensive experience advising on all elements of contract and procurement law and can assist contracting authorities with any contractual issues they are facing due to the outbreak of COVID-19. Our public procurement specialists and contract lawyers can advise on the implications to each individual contract and guide clients through any required variation.
This article is for general awareness only and does not constitute legal or professional advice. Law and guidance relating to the COVID19 pandemic is continually being updated and the law may have changed since this page was first published. If you would like further advice and assistance in relation to any issues raised, please contact us today by telephone or email email@example.com.