The Cabinet Office has published Procurement Policy Note 04/19 (PPN 04/19), which sets out how the payment approaches of bidders can be taken into account in the procurement of major government contracts.
The PPN applies to all central government departments, their executive agencies and non-departmental public bodies when procuring contracts for goods, services or works valued above £5 million per annum under the Public Contracts Regulations 2015. The £5m per annum figure is based on advertised contract value, averaged over the life of the contract. For example, a contract with a four year term with a total contract value of £21m would be in scope, even if the value in the first year was under £5m.
A guidance note accompanies the PPN and sets out the assessment methodology for contracting authorities to use to check that a bidder has effective payment systems in place. It explains when it would be appropriate to exclude bidders that cannot demonstrate they have effective systems.
The PPN is another attempt by the Government to encourage bidders for public contracts to comply with its Prompt Payment Code. Bidders should review the PPN and guidance to ensure they can demonstrate compliance and avoid unnecessary exclusion.
A copy of the PPN and accompanying guidance note is available at: https://www.gov.uk/government/publications/procurement-policy-note-0419-taking-account-of-a-suppliers-approach-to-payment-in-the-procurement-of-major-contracts--2