Regulation 113(2) of the new Public Contracts Regulations 2015 requires all public contracts (other than health care contracts falling under the NHS Regulations 2013, and contracts awarded by maintained schools/Academies) to include provisions which require:
- any valid and undisputed invoice for payment due from the contracting authority to the contractor to be paid within 30 days;
- any invoices submitted by the contractor to be considered and verified in a timely fashion by the contracting authority;
- any subcontract awarded by the contractor to contain the same requirements as above; and
- any subcontract awarded by any subcontractor to contain the same requirements as above
While a failure to comply with regulation 113 does not invalidate a contract, if a public contract does not have express provisions reflecting reguation 113(2), these requirements will form implied terms of the contract (or sub-contract), by virtue of regulation 113(6). It should also be noted that authorities are required to publish annual statistics declaring the extent of their compliance with the prompt payment requirements.
The regulation 113(2) requirements are without prejudice to any contractual or statutory provision requiring payment to be made earlier than 30 days (regulation 113(3)).
This is the third in a series of articles on the Public Contracts Regulations 2015 prepared by members of Sharpe Pritchard’s procurement team, recognised leading providers of procurement advice nationally. Our clients include government departments, local authorities, housing associations and major private sector providers.