Your privacy is important to us.
By way of PGN 01/20, the Executive implemented measures, with effect from 25th March 2020, to ensure that Departments pay their suppliers as quickly as possible, in order to maintain cash flow and protect jobs. This article takes a look at the steps that the public sector need to consider.
The first thing to note is that the measures apply to those bodies subject to Northern Ireland Public Procurement Policy. The PGN is also meant to form guidance for other public sector bodies. Public sector bodies should therefore check whether or not they are subject to the Northern Ireland Public Procurement Policy.
The ethos of the PGN is to protect the supply and support at risk suppliers. The measures set out therein, both collectively and individually, endeavour to cushion the blow of the current outbreak of COVID-19 on suppliers. It goes as far as suggesting payments, in some circumstances, may still be made to at risk suppliers even if goods and services are paused. The PGN also suggests that allowances should be made in some circumstances in respect of KPIs.
Risks in respect of payments being made to suppliers need to be managed on a case by case basis. The public sector may therefore seek vesting certificates, guarantees or other protections and as such legal advice on such documentation should be sought.
On no less than five occasions, the PGN explicitly requires public sector bodies to seek legal advices before taking action. Therefore, if you are reading this in anticipation of applying the PGN, you should consider whether the actions you are considering require legal advice to be taken. Our team are on the CPD Collaborative Legal Services Framework and the Crown Commercial Service Wider Public Sector Legal Services Framework, as well a host of other public sector legal services’ panels, and can help guide you through this process.
While the steps to assist at risk suppliers are set out in the PGN, it also states that the Accounting Officers are not relieved from their usual duties and so they must still ensure that “spending is regular, proper and value for money”.
The PGN requires all public bodies to, amongst other things, “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”. Help will only be given to those private sector companies that are willing to work on an open book basis and profits will not be accounted for in this exercise.
It should be noted that in order to protect the public purse, that the PGN states that “Payments should not be made to suppliers where there is no contractual volume commitment to supply, and contracting authorities should carefully consider the extent of payments to be made to suppliers who are underperforming and subject to an existing improvement plan.” This therefore means that the protections will not be available to all suppliers, and public bodies should review on a case by case basis.
The public sector can also consider redeploying contractors if the current contractual requirement is not required but other services are required elsewhere. In doing so Regulation 72 will need to be considered.
The PGN also covers Force Majeure and Frustration but given the legal nature of these concepts, legal advice should be sought.
Public sector organisations are encouraged to pay invoices as quickly as possible. The PGN sets out a number of measures that should be considered such as ensuring sufficient resources are available, delegate authority, overlooking minor administrative issues on invoices and reissuing payment processes to contractors to ensure that they are clear as to the payment authorisation process.
If you want to read the guidance in full, please click here. Our team can assist in reviewing contracts and advising further should you require.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Procurement team at Cleaver Fulton Rankin for further advice or information.