The Cabinet Office has recently published a new Procurement Policy Note PPN 07/20 (PPN 07/20) together with associated Guidance. Please see https://www.gov.uk/government/publications/procurement-policy-note/.
The new notice sets out how payment approaches of tenderers can be taken into account in the procurement of major government contracts and replaces PPN 04/19 from 1 April 2021. Policy Note 04/19 had previously set out new rules on prompt payment in supply chains in accordance with Government’s previous Manifesto commitments to assist SME’s with prompt payments.
PPN 07/20 applies to all central government departments, their executive agencies and Non-Departmental Public Bodies which the new notice refers to as “In-Scope Organisations”.
In-Scope Organisations must apply PPN 07/20 when procuring goods or services or works with an anticipated contract value above £5 million per annum (excluding VAT) which are subject to the Public Contracts Regulations 2015 (SI 2015/102) except where, in exceptional circumstances, it would not be relevant or proportionate to do so. The new notice also applies to framework agreements and dynamic purchasing systems where it is anticipated that the individual value of any contract to be awarded under the framework agreement or dynamic purchasing system is greater than £5 million per annum (excluding VAT).
Under the terms of PPN 07/20 In-Scope Organisations must use the questions contained within it as sub-questions within section 6.2 of the standard selection questionnaire. In-Scope organisations must use PAS91 (a standardised pre-qualification questionnaire) for selection for works contracts (including the procurement of goods and services needed in relation to the works) and should incorporate the questions contained within PPN 07/20 as project specific questions within PAS91.
The guidance accompanying PPN 07/20 explains how to include an assessment of a bidder’s payment systems to demonstrate it has a reliable supply chain and when it would be appropriate to exclude those bidders that cannot demonstrate they have effective systems in place. It also gives examples of exceptional circumstances where it might not be relevant or proportionate to apply PPN 07/20. The provisions of PPN 07/20 must be applied in relevant procurements advertised on or after 1 April 2021. PPN 04/19 will continue to apply to all relevant procurements before that date.
