Operators to be paid for local authority contracts until ‘at least the end of June’

News stories are free to read. Click here for full access to all the features, articles and archive from only £2.99.

The Cabinet Office has issued a Procurement Policy Note (PPN), offering guidance for public bodies on how to handle the payment of suppliers in light of the COVID-19 crisis.

Aimed at ensuring services continue during and after the pandemic where possible, the document states that contracting authorities ‘must act now to ensure suppliers at risk are in a position to resume normal contract delivery once the outbreak is over.’

Reassuringly for coach and bus operators running services on behalf of their local authority or any other public body, the note clarifies that all invoices for contract work will continue to be paid until ‘at least the end of June.’

The PPN advises public bodies 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; and
  • 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.