Cabinet Office publishes Procurement Policy Note 04/19 setting out new rules on prompt payment in supply chains

The Cabinet Office has published Procurement Policy Note 04/19 (PPN 04/19), which came into effect on 1 September 2019 and sets out how the payment approaches of contractors can be taken into account in the procurement of major government contracts. The PPN updates and replaces PPN 04/18.

PPN 04/19 applies to all central government departments, their executive agencies and non-departmental public bodies. These organisations are required to apply the PPN when procuring contracts for goods or services or works valued above £5 million per annum (excluding VAT) which are subject to the Public Contracts Regulations 2015 (SI 2015/102) except where, exceptionally, it would not be relevant or proportionate to do so.

The guidance accompanying PPN 04/19 explains how to include an assessment of a supplier’s payment systems in a procurement selection process to confirm whether it has a reliable supply chain and when it would be appropriate to exclude those suppliers that cannot demonstrate they have effective systems in place. It also gives examples of exceptional circumstances where it might not be relevant or proportionate to apply the PPN.