Cabinet Office updates how payment approaches can be taken into account in major Government contracts

From: techUK
Published: Mon Oct 25 2021

PPN 08/21 will come into effect from 1st April 2022.

Government has published a new Public Policy Note to update and replace PPN 07/20, which will come into effect from 1st April 2022.

The new PPN 08/21 sets out how payment approaches can be taken into account in the procurement of major Government contracts above 5 million per annum. This is further to Government's pledge to use its buying power to ensure contractors comply with the Prompt Payment Code; and that businesses have a healthy cash flow.

The key change to PPN 07/20 is that Government suppliers will have to demonstrate they pay 95% of their invoices within 60 days, which is an increase from the current 85%. Indeed, bidders must demonstrate that they meet the required standard in at least one of the two previous six month periods.

Those who do not meet the required standard, showing that they have effective payment systems in place to ensure the reliability of their supply chains, may be excluded from contracts worth more than 5m per annum.

Suppliers whose performance is between 90% and 95% will need to continue to submit action plans detailing how they will improve their performance to 95%.

The guidance published alongside PPN 08/21 has also reiterated how the Government expects supply chain finance to be treated when being assessed as part of a bid.

You can view the PPN, its supporting documents and the answers to Frequently Asked Questions here.

Company: techUK

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