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Since the Government issued the Public Procurement Note 02/20 (PPN) as part of its strategy to mitigate the impact of COVID-19 on the economy, schools and academies have been approached by numerous suppliers who are claiming relief under PPN.

Whilst we appreciate the instinct to follow the Government’s guidance at this difficult time, a school or academy should be careful to ensure that PPN does apply and if it does, they follow its provisions before they make any payments under it. We are aware of several cases where suppliers have claimed payments under PPN to which they were not entitled.

Before responding to a request for a payment or contract variation under PPN you should ensure that:

  1. The contract concerned was entered into under procurements carried out under the Public Contract Regulations 2015 or the Concession Contracts Regulations 2016;
  2. That the supplier had not furloughed the staff who would otherwise be providing the goods or services under the contact;
  3. That the supplier is genuinely “at risk” of collapse if payments are not made;
  4. That the supplier is or would be using the money to pay staff and suppliers and that they will not be making a profit from payments for services or goods which will not be delivered;
  5. The contract is not a “framework” under which the supplier is not guaranteed to receive any orders; and
  6. That you have not had to procure substitute goods or services because the supplier could not supply them under the contract.

If any one of these criteria is not met, payments should not be made to suppliers.

Even if the criteria are satisfied, schools and academies must work closely with suppliers (who are obliged to disclose all relevant financial information) to ensure that the sums claimed are properly due under PPN. If this is this case, your contract should be formally amended to reflect these changes in payment (and any other terms) and it should be clear that the variation only lasts until the impact of COVID-19 subsides.

It is the responsibility of each school or academy to judge whether payments should be made and, if you are in doubt, you should seek advice. If you suspect that you have made payments which, on reflection, you should not have, then you should seek to recover these from a supplier as soon as possible.

Of course, there will be many contracts which fall outside of PPN which are heavily affected by the impact of COVID 19. You should review each one carefully and take advice on your rights under the contract and your options for working with your suppliers in the current circumstances. Any agreed amendments to the contract should be formally recorded and you should have the right to return to the original contract once COVID 19 is no longer affecting it.

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