As the country takes its first tentative steps towards the new “normal” it is essential for contracting authorities to review the viability of their contractual arrangements and, most importantly, the interim provisions introduced in response to the Covid-19 pandemic. Consequently, now is the time to build upon the considerations contained in my previous blog on this issue.
Following on from the information and guidance contained in PPN 01/20 and PPN 02/20 the Cabinet Office have now issued PPN 04/20 that applies for the period 1 July 2020 to 31 October 2020. The new PPN provides advice on the transition from the arrangements implemented pursuant to PPN 01/20 and 02/20. Overall the PPN emphasizes the need for contracting authorities and suppliers to work in partnership, openly and pragmatically to ensure that contracts are sustainable in the longer term.
The next steps for contracting authorities are dependent largely on the long-term viability of the contracts concerned. For example, is the contract still relevant and sustainable in terms of both delivery and cost when considered in the context of the Health Protection (Coronavirus Restrictions) (England) Regulations 2020 (“the Regulations”) and the Public Health England guidance? Is a long term variation permissible under the Public Contract Regulations 2015? Can a variation to the contract achieve viability or do options for termination need to be considered?
The parties need to work together to develop a transition plan that provides a process for ending interim arrangements and moving to a long-term arrangement. Such arrangements to consider include:
- Reviewing payment provisions – i.e. can payment be considered against revised milestones or KPIs, can advance or interim payments be made?
- Reviewing invoice arrangements – i.e. ensuring a swift process for receipt and verification of invoices, paying invoices prior to verification and reconciling discrepancies later.
On a practical delivery level parties should begin to determine:
- The effect that social distancing rules have on delivering the contract to the specification requirements and whether this will be possible;
- How additional costs should be distributed between the parties, i.e. who bears the costs of face shields, sanitizing products etc. the supplier’s staff are required to use to deliver the contract;
- What evidence the contracting authority will require to demonstrate that the supplier is delivering the contract in accordance with the Regulations and Public Health England guidance.
The overriding principle is for the parties to act reasonably and proportionately. Suppliers are not automatically entitled to relief but contracting authorities must work collaboratively with their suppliers to achieve a practical outcome. So generally, the position remains that there is no simple answer to “what happens next” and each contract will need to be considered within the context of its own circumstances and the continually changing circumstances of the country.
Should you wish to explore these issues in more detail we would be pleased to offer advice and guidance.
Related Article: So what happens next… contractual arrangements post “lockdown”
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 covidhelp@sharpepritchard.co.uk.
