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Procurement Policy Notice (PPN) 02/20: Supplier relief due to COVID-19 – additional sector guidance for state funded schools

15 May

The Government has recently released additional guidance on Procurement Policy Notice (PPN) 02/20 for state funded schools. PPN 02/20 provides that publicly funded bodies should continue to pay their ‘at risk’ suppliers during the Covid-19 pandemic. The new guidance is likely to be beneficial to operators whose payments for their school contracts have been suspended during the school closures.

The guidance makes clear that schools will be continuing to receive their core funding allocations from the government and therefore they should continue to make payment of their contracted goods, services and works contracts. This should include procured transport contracts, provided that these are not funded privately, i.e. by parents of students. Maintained schools, academy trusts and non-maintained special schools will all be classed as a contracting authority for the application of the PPN.

The Department for Education has been applying a five-stage approach to determine whether suppliers would fall within the scope of the PPN and they have now shared details of this approach within the guidance to help schools deal with requests. The guidance acknowledges that the same approach will not work for all schools but it provides some overarching guidance and principles which are summarised below.

Stage 1: Assess whether the supplier has considered other forms of support available from the government, including the wiser business support schemes. This is to avoid the supplier receiving a duplication of funding, for example under the PPN and the Coronavirus Job Retention Scheme (CJRS).

Stage 2: Assess whether the supplier provides a service that is critical to the school in the medium and long term and whether it is important for business continuity to continue to pay under the contract.

Stage 3: Assess whether the supplier is financially ‘at risk’ as a result of the Covid-19 implications. This will be where the supplier is unable to fulfil the contractual obligations of a contract and are experiencing financial difficulties as a result.

Stage 4: Consider the type of commercial support that should be given to the supplier under the PPN. This includes, for example, continuing to pay for services to suppliers who give their best endeavours to continue delivery despite performance being somewhat affected and supplementing service delivery through the school’s own resources where this could help to alleviate the challenges that the supplier is facing.

Stage 5: Consider what financial interventions should be made. The suggested options are:

  • Variation of the payment mechanism to provide greater short-term cash flow to the supplier;
  • Increasing speed of payment
  • Prepayment of up to 25% of the contract value – this specially targets short-term cash flow but may cause cash flow issues further down the line.

Where payments do continue to be paid, suppliers must agree to act on an open book basis and make cost data available to the school where requested. It is therefore important that suppliers ensure that there is no double recovery under the PPN and other governments schemes and that they keep a record of the decisions and agreements made in relation to the continued payment of the contract to enable future reconciliation if it becomes necessary.

Operators should refer to our Advice Note on PPN 02/20 if they are continuing to be paid in full for contracts that are no longer being performed. It is important that operators get this right so you are encouraged to seek legal advice.

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