Institute of Transport Administration

Educating Transport Management since 1944


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Cabinet Office Issued Procurement Policy Note on payment of suppliers to ensure service continuity

6 Apr 2020

The Cabinet Office issued a Procurement Policy Note in March setting out information and guidance for public bodies on payment of their suppliers to ensure service continuity during and after the current coronavirus, COVID-19, outbreak

It stated that contracting authorities must act to ensure suppliers at risk are in a position to resume normal contract delivery once the outbreak is over

All contracting authorities were instructed to:

•            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).

•            If the contract involves payment by results then payment should be on the basis of             previous invoices, for example the average monthly payment over the previous       three months.

•            To qualify, suppliers should agree to act on an open book basis and make cost data             available to the contracting authority during this period. They should continue to      pay employees and flow down funding to their subcontractors.

•            Ensure invoices submitted by suppliers are paid immediately on receipt in order to          maintain cash flow in the supply chain and protect jobs.

This PPN is applicable to all contracting authorities, including central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector (excluding Devolved Administrations).

It was applicable with immediate effect and will last until 30 June 2020. HM Treasury will review in mid-June whether this consent needs to be extended for a further period.

The PPN should be of significant benefit to the PSV sector by securing payments for home to school transport, tendered services, concessionary fare reimbursement and BSOG payments at ‘business as usual’ levels.