Procurement & Coronavirus - 7 April 2020

The Crown Commercial Service has published additional guidance, FAQs in support of Procurement Policy Note PPN 02/20 as well as prepared construction-specific guidance. Furthermore, it has issued another PPN on Procurement Cards and the EU has also issued guidance.

Guidance Notes on Model Interim Payment Terms

The purpose of the Model Interim Payments Terms (“Model Terms”), which are in a standard form letter, is to set out the terms that contracting authorities can use to implement PPN 02/20 in providing contractual relief to suppliers who have been affected by COVID-19. This includes preventing a supplier claiming separate relief from another source of Government financial support on COVID-19.

The Guidance notes on Model Terms state that all contracting authorities should consider using the Model Terms.

Guidance Notes on Payments to Suppliers for Contingent Workers Impacted by Covid-19

The purpose of the Guidance notes on Contingent Workers (likely to include non-permanent employees such as contractors, freelancers, agency workers and consultants) is to provide measures that contracting authorities can use to implement with Contingent Workers who have been affected by COVID-19 and are unable to work as a result. There are 23 FAQs.

The Guidance notes on Contingent Workers apply to all Central Government Departments, Executive Agencies and Non Department Public Bodies. Other contracting authorities are encouraged to apply the approach.

Frequently Asked Questions (FAQs) – Procurement Policy Note 02/20 (Dated 27 March 2020)

The FAQs document contains 17 FAQs regarding the scope and application of PPN 02/20 on supplier relief. These address a range of issues, including:

• Does PPN 02/20 applies to grants? – the short answer is “no”
• What is the definition of an “at risk” supplier? – this is at the discretion of the contracting authority and should be taken on a case by case basis.
• Should contracting authorities continue to pay suppliers where the contract does not have a volume commitment? – not normally, but this should be reviewed on a case by case basis.
• If Contracting authorities need to pay suppliers ‘immediately’ on receipt of invoice, does this mean they can ignore the usual checks? – No, basic due diligence checks should be still be undertaken, however payment delays should not occur due to minor admin errors, when the goods have been delivered.

Guidance Notes for Construction Contracts - Procurement Policy Note 02/20

The new update focusses on how CAs can support supply chains during the current crisis. The purpose of the guidance notes is to support current industry contracts and includes some model deeds of variation. The note recognises that most UK construction suppliers will be ‘at risk’ as a result of the COVID-19 crisis and therefore clients do not need to undertake detailed financial analysis before providing relief.

The note also blocks companies from furloughing staff that are due to work under contracts that are subject to relief. The model deeds of variation provide a set of terms that contracting authorities can use for NEC3 and JCT standard forms of contracts.

Procurement Policy Note 03/20 – Use of Procurement Cards

Increasing use of procurement cards can improve organisations’ efficiency and accelerate payment to their suppliers while still ensuring robust controls. In scope organisations (although other public CAs can also apply this approach) should urgently engage with their procurement card provider to:

• Increase the single transaction limit to £20,000 for key card holders1, and
• Raise the monthly limit on spending with procurement cards to £100,000 for key card holders. Monthly spend on procurement cards in excess of £100,000 should be permissible to meet business needs.

European Commission Communication on public procurement in the COVID-19 emergency situation 2020/C 108 1/01

The European Commission has also published a Communication “Guidance on using the public procurement framework in the emergency situation related to the COVID-19 crisis”

The Guidance sets out three methods for procurement by public purchasers in responding to the current COVID-19 emergency, which in some cases will require delivery of goods within days or even hours:

• use of the accelerated forms of the open and restricted procedures, with explanations of the reduced timescales available
• negotiated procedure without prior publication of a notice
• alternative solutions for engaging with the market - essentially where the current nature of the market means that the other procedures are not fit for purpose. The Guidance refers to possible routes such as hackathons and closer working with “innovation ecosystems and entrepreneurs’ networks”.

The Guidance emphasises that the European public procurement framework provides all necessary flexibility to public buyers to purchase goods and services directly linked to the COVID-19 crisis as quickly as possible.

Using the negotiated procedure is a major departure from the basic principle of the Treaty concerning transparency. CAs are reminded that the ECJ requires that the use of this procedure remains exceptional (to satisfy stop-gap needs only) when all conditions for its use are met cumulatively. Each contracting authority will also have to justify its choice of such a procedure in an individual report.

In the context of hospitals and healthcare institutions the Guidance provides some reassurance to purchasers procuring requirements in response to the COVID-19 emergency - in terms of satisfying the conditions for use of the negotiated procedure without prior publication of a notice. The specific needs for hospitals and other healthcare institutions could not be foreseen and planned in advance and “thus constitute an unforeseeable event”.