Overview
This PPN sets out how payment approaches must be taken into account in the procurement of high value contracts (exceeding £5 million per annum) advertised on or after 1 April 2024 by central government contracting authorities, including their executive agencies and non-departmental public bodies (collectively referred to as ‘in-scope organisations’).
For contracts within the scope of the PPN, in-scope organisations must incorporate additional questions into their standard selection questionnaire (SQ) to assess a supplier’s payment system, for the purposes of demonstrating the reliability of their supply chain. These questions require suppliers to demonstrate that they are paying 95% of invoices within 60 days (90% with an action plan), and pay all invoices within an average of 55 days.
The PPN includes accompanying guidance which explains how the contracting authority must assess these questions and when it would be appropriate to exclude those bidders that cannot demonstrate that they have effective payment systems in place.
Objective at this commercial stage
In designing an appropriate procurement strategy for relevant in-scope contracts, the selection stage should take into account the suppliers’ approach to payment in order to assess the reliability of their supply chain.
Key considerations at this commercial stage
In-scope organisations should:
- ensure, with regards to in-scope contracts, the suppliers’ approach to payment and reliability of their supply chain is assessed as part of the selection stage of the procurement.
Legal framework
The PPN should be read alongside the relevant parts of the legal framework, including but not limited to, the following provisions of the Public Contracts Regulations 2015 (which may be particularly relevant to the consideration of this PPN):
- Regulation 58: Selection criteria
- Regulation 107: Qualitative selection
- Regulation 113: Payment of undisputed invoices within 30 days by contracting authorities, contractors and subcontractors.
Additional support and guidance
Make sure you:
- read the PPN and any supporting implementation guidance
- seek legal and commercial advice in the context of specific procurements
