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New Scottish Procurement Policy Note (SPPN) - Coronavirus (COVID-19): supplier relief

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The Scottish Government has issued a new Scottish Procurement Policy Note (SPPN 5/2020) regarding Coronavirus (COVID-19) and supplier relief.

This policy note sets out guidance for public bodies on options for payment to their suppliers to ensure service continuity during the current Coronavirus (COVID-19) outbreak.

The current outbreak of COVID-19 is unprecedented and will have a significant impact on businesses of all sizes. Many suppliers to public bodies will struggle to meet their contractual obligations. This will put their financial viability, ability to retain staff and their supply chains at risk. Public bodies should act now to support their suppliers so they are better able to cope with the current crisis and to resume normal service delivery and fulfil their contractual obligations when the outbreak is over.

This SPPN offers guidance on steps that public bodies can take to provide supplier relief under existing contracts. Although the guidance makes reference to the Public Contracts (Scotland) Regulations 2015 (2015 Regulations), this is not to be read as meaning that the advice applies only to contracts within scope of those Regulations; these principles also apply to lower value contacts.

Visit the Scottish Government website to view the SPPN in full.

SDP: What does this SPPN mean for suppliers?

The SPPN suggests that upon request from a supplier, buyers give consideration to advance payment. It doesn’t advocate that buyers offer this to the supply base - rather, it is purely upon application - however, in the spirit of "working with the supply base," SDP understands that some buyers may choose to offer this as a route to suppliers. Therefore, suppliers that require advance payment must request this from each buyer for each contract to which this may apply.

Suppliers must set out in their request(s) exactly what they intend to do with it, and have to commit to pay their staff and their supply chain as a minimum.

The maximum amount that buyers can offer is 25% of the contract value, and only cover up to the end of June 2020.

This should only be where a buyer is satisfied that the risk to the buyer is sufficiently low, and should also only be done if the buyer's internal governance permits it.

Possible Scenarios of Application

This could mean that buyers pay in advance now for goods to be delivered later, or that for works or services, the supplier proposes a new schedule for approval, that details when the works or services will be completed. It may be that the buyer simply asks the supplier to reschedule the services so they don’t incur outlay – it doesn’t necessarily mean that buyers pay them up front. It can also mean that buyers continue to pay for services that they would normally pay for monthly/quarterly, but don’t currently receive because of the current situation.

It doesn’t suggest that buyers don’t get anything in return, so when the situation improves then the supplier is obliged to deliver their contractual obligations and receive no further payment (as they have already been paid).

Lastly, it suggests that buyers ease off on expectations pertaining to SLAs and not expect KPIs to be met or impose damages when they aren’t – SDP understands that some buyers may already be doing this with their supply base.

Other important things to note:

  • The Supplier cannot combine supplier relief with any other COVID-19 related relief, grant, intervention or other measure which results in more than one benefit to the same underlying cash-flow issue.
  • The Supplier needs to prove - upon request from the buyer - that they have used the money as intended.

More Information

SDP is developing more tools and information to answer suppliers' questions on this SPPN. Please feel free to submit your comments and questions on this page, and a member of the SDP Team will respond. Alternatively, please email info@sdpscotland.co.uk for more information.

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