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Local Councils ordered to pay contractors during coronavirus pandemic

Tuesday 24th March 2020


Inside Housing reports on efforts to protect the construction industry

Yesterday (23/03/2020), Inside Housing published information stating, “a procurement policy note from the Cabinet Office said that public sector bodies must “act now” to ensure contractors, including those working on construction projects, are protected.”


The Procurement Policy Note (Supplier relief due to COVID-19) lists the following action:


All contracting authorities should:

  • 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/pre-payment, 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 (reconciliation can take place in slower time) in order to maintain cash flow in the supply chain and protect jobs.

Full information can be found in the Cabinet Office’s Procurement Policy Note - Supplier relief due to COVID-19:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874178/PPN_02_20_Supplier_Relief_due_to_Covid19.pdf

 

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