All content on this page is correct as of April 2, 2020
The government has issued two Procurement Policy Notes in quick succession as part of their response to the ramifications of COVID-19. Whilst they are relevant primarily for those providing goods, works and services to government, there are perhaps lessons for businesses more generally in terms of engagement with their supply chains / value circles, particularly in the more recent of these.
Procurement Policy Note 02/20: Supplier Relief due to COVID-19 (PPN 02/20) contains guidance for public bodies on payment of suppliers, with the focus on ensuring:
Authorities are urged by the guidance to review proactively their contracting arrangements to identify appropriate steps to support suppliers with cashflow issues, at least until the end of June. Various methods of prompt and even pre-payment of suppliers are outlined to assist with these objectives.
The guidance demonstrates a strong preference for parties taking proactive and collaborative steps to preserve the service and contractual relationship if at all possible, utilising the contract variation procedures as necessary, rather than looking immediately to their contractual rights and/or seeking to terminate.
Procurement Policy Note 01/20: Responding to COVID-19 (PPN 01/20) reminds contracting authorities – and their suppliers – what flexibilities currently exist within the Public Procurement Regulations to act quickly, where necessary, to procure goods and services. It is not a relaxation of the regulations in the face of COVID-19, but a handy synopsis of the routes potentially available to parties. In addition to limited emergency procedures, some of the other options available include:
Taken together, this guidance from government demonstrates – as evidenced in other policy decisions of late – a new found recognition of the mutuality of relationships between different stakeholders in the economy. It advocates voluntary action to preserve the status of contractors – not out of altruism, but an understanding it is in the other party’s own interests to avoid service disruption and the need to go to the time and expense of re-procuring, as well as the impact there will be on the market and pricing if only one or two suppliers survive. It encourages working collaboratively, outside the narrow terms of contracts negotiated in different times, and flexibility to find mutually acceptable positions from which to move forward.
These are all lessons any business would be wise to consider in engaging with their stakeholders in this new paradigm.
This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.
All content on this page is correct as of April 2, 2020.