06 May 2020
This article summarises Procurement Policy Note 02/20, a resource for thinking through how to engage with suppliers during the lockdown.
Housing associations are committed to supporting suppliers wherever possible and avoiding the disruption that would result were a supplier to go out of business. We know that housing associations will be engaging constructively with suppliers during this time, and may therefore find Procurement Policy Note 02/20 (PPN 02/20) a helpful reference as they consider what action may be appropriate.
PPN 02/20 sets out a number of suggested measures to support suppliers' cash flow, including earlier payment, or payment upon delivery but prior to reconciliation. It also suggests that, to facilitate this process, suppliers should adopt an ‘open book’ approach.
PPN 02/20 also contains guidance about the legal concepts of 'force majeure' and frustration. This is applicable in circumstances where it become impossible, for reasons beyond the control of the party concerned, to fulfil the terms of a contract.
PPN 02/20 was issued last month by the Cabinet Office and sets out expectations about how public bodies should deal with their suppliers to identify any that may be at risk due to the effects of the lockdown. The aim is to protect, so far as possible, the financial viability of suppliers so that the current emergency does not cause lasting disruption to supply chains.
Irrespective of the legal debate over whether PPN 02/20 applies to housing associations, housing associations may find this note helpful in thinking through how to engage with suppliers during this time.