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UK Government updates guidance to public bodies in respect of Covid-19 supplier relief measures

10 June 2020

The UK Government has issued the new PPN 04/20  guidelines to public bodies inviting them to review and consider implementing appropriate exit plans for any relief measures which they have put in place to assist their "at risk" suppliers pursuant to the PPN 02/20 guidelines issued in March 2020.

With the recently published PPN 04/20 (effective from 1 July to 31 October 2020), the UK government has asked public bodies to review their contract portfolio and, where reasonably possible, collaborate with their suppliers to develop transition plans to enable them to swiftly exit from any supplier relief arrangements entered into in accordance with the PPN 02/20 guidelines published in March and applicable to 30 June 2020.  Whilst the guidances stresses that where it remains critical for the continued delivery of key services, public bodies should still continue or commence relief measures in line with PPN 02/20, it is a signal that Covid-19 relief cannot go on indefinitely.

Where public bodies have made continuity payments for interrupted contracts pursuant to PPN 02/20, or have made payments against revised/extended milestones or timescales, or made interim/advanced payments and/or forward orders, they should now (where appropriate) begin working with suppliers to develop a transition plan to be implemented as soon as possible or no later than the end of October 2020.

Where public bodies deem it necessary to implement transition plans, the arrangements would need to be agreed by both parties and should include:

  1. a planned exit date for when the supplier relief will end;
  2. where advanced payments have been made, the delivery date for any outstanding goods or services are to be delivered;
  3. the process for reconciling payments made against costs in any interim payment agreements;
  4. an assessment of any costs associated with implementing Public Health England guidance specifically in relation to delivering goods and services under the contract; and
  5. an assessment of whether, as a result of Covid-19, the contract is still operationally relevant and viable and, if not, proposals for variation or termination.

Conclusions

The above offers helpful guidance to both procuring authorities and their suppliers to enable them to understand the UK Government's expectations as it now looks to relax lockdown measures and roll out its Covid-19 recovery strategy. Public bodies should now start reviewing any ongoing PPN 02/20 related relief measures to see if they are still appropriate and where necessary, enter into discusssions with suppliers to develop exit strategies with a view towards developing sustainable arrangements in light of the changing landscape.

DWF Law LLP has a breadth of expertise in public procurement and State aid law matters. We are able to draw upon a team of leading experts, in our UK, Brussels and other international offices, who have extensive experience in this area, including working within the UK Government on high profile funding matters, defending projects from recovery and designing projects to meet the rules. If you have any questions, please reach out to one of the contacts below.

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