As the COVID-19 pandemic continues to cause concern for buyers, suppliers and other stakeholders, it is important to recognise that procurement has perhaps never played a more important role in bringing businesses and communities together. How businesses procure goods, works and services and how decisions are made in the tendering process throughout this unprecedented period will be crucial to ensure public services receive the resources they need to ultimately save lives.
The Government’s Procurement Policy Note (PPN) in context
To support businesses navigating public procurement during this time, the Government have released two editions of the Procurement Policy Note (PPN). The PPN document outlines guidance for public sector buyers and contracting authorities on the public procurement regulations and how to support their wider supply chain during the current COVID-19 outbreak. The guidance applies to all contracting authorities, including central government departments, executive agencies, public bodies, local authorities, NHS bodies and the wider public sector with immediate effect.
Procurement Regulations during COVID-19
There may be significant changes to procurement regulations due to COVID-19, as noted in the PPN. The Cabinet Office noted that authorities may need to “procure goods, works and services with extreme urgency” during this time.
If your organisation has an urgent requirement for goods, works or services due to the outbreak, you will need to procure them under the Public Contract Regulations 2015 where the following options are available:
- Direct award due to extreme urgency.
- Direct award due to absence of competition or protection of exclusive rights.
- Call off from an existing framework agreement or dynamic purchasing system.
- Call from competition using a standard procedure with accelerated timescales.
- Extending or modifying a contract during its term.
Regulation 32 of the Public Procurement Regulations 2015 (PCRs) is designed for circumstances like COVID-19. Regulation 32(2)(c) allows buyers to procure using the negotiated procedure without prior publication of a contract notice (ie direct award) in a series of very specific circumstances, one of which 32(2)(c) is:” insofar as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with.”
So long as contracting authorities can demonstrate genuine reasons for extreme urgency, contracting authorities may enter into contracts with suppliers without competing or advertising the requirement, relying on regulation 32(2)(c). This is hugely significant and will save considerable time in the tender process.
It is worth noting that organisations working in public sector procurement still need to ensure that they are being as transparent as possible at this time. Keeping records of decisions and actions on individual contracts is strongly advised, as this can help to protect contracting authorities from the risk of legal challenges.
Four actions public sector buyers need to take
In a previous PPN published last week, the Cabinet noted that the COVID-19 outbreak is expected to cause supply chain disruption and contracting authorities need to take immediate action in order to limit potential damage.
The latest version of the PPN document outlines actions public sector buyers and contracting authorities should take regarding payments to suppliers, to ensure service continuity during and after the Coronavirus pandemic.
Delta summarises the key actions from the latest PPN for the benefit of our customers and wider community.
Review your contracts and communicate with suppliers
If you haven’t already, all buying organisations should urgently review their contract portfolio of current and prospective projects. When this has been completed, inform your suppliers immediately that they will be paid as normal until the end of June (at least), even if services may be disrupted or temporarily suspended. Suppliers may have already communicated with you if they feel they are at risk. I this instance, reassure them they will still receive payment in the circumstances highlighted above.
Put in place appropriate payment measures
During the pandemic, it is extremely important that public authorities have implemented appropriate measures to support supplier cash flow. This may include a range of approaches:
- Forward ordering
- Payment in advance/pre-payment
- Interim payments
- Payment on order (not receipt)
Should a contract involve payment by results, then payment should be based on previous invoices and take the average monthly payment over the previous three months.
Suppliers should be as transparent as possible
Suppliers should agree to act on an open book basis and make cost data available to the contracting authority during this period. In addition to this, suppliers should continue to pay employees and flow down funding to their subcontractors to ensure all organisations stay supported as best they can be.
Pay suppliers immediately on receipt
During this unprecedented time, prompt payment in public sector procurement is as crucial as ever. Invoices submitted by suppliers should be paid immediately upon receipt. This is to support the maintenance of cash flow in the supply chain and to protect people’s jobs across sectors and businesses.
Find out more information on the PPN
Our sister brand Procurement Advice and Support Service (PASS) has been working hard to keep our customers and community updated on the latest Government procurement advice. Download their briefing documents that include the latest information from the Cabinet Office, in the form of a Procurement Policy Note on Responding to COVID-19 and on Supplier Relief due to COVID-19.
Make positive changes to your supply chain
The COVID-19 pandemic may expose further supply chain failings before it is over, particularly the lack of risk management, resilience and agility in supply chains which can be vastly improved by implementing more effective lines of communication. In addition to this, encouraging collaboration on a project starts with buyers, and this can be helped by addressing the points raised in the Government’s PPN.
As the COVID-19 situation evolves, public procurement regulations will be under constant review from the Government. Delta eSourcing, along with our sister brand, PASS, will continue to update our customers and community on these updates. To find out more information for procurement buyers during the outbreak, and to receive further support, visit the PASS COVID-19 resources page.
In the meantime, find out about effective Supplier Management techniques in procurement on our blog.