Procurement in a Nutshell: Immediate changes – Procurement Policy Notes
15th April, 2020
With increased importance on maintaining cash flow to suppliers, the Government is encouraging the use of procurement cards as way to improve efficiency and accelerate payment to organisations' suppliers.
This PPN supplements the advice provided in PPN 02/20 which requested contracting authorities pay suppliers as quickly as possible to maintain cash flow and protect jobs during the pandemic.
Although the Public Contracts Regulations 2015 already require contracting authorities to pay suppliers within 30 days from the date of a valid and undisputed invoice, these recent PPNs make it vital for contracting authorities to accelerate their payment practices and pay all suppliers as quickly as possible.
PPN 03/20: Use of procurement cards
Who does this apply to?
This PPN applies to all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies. In addition, other public sector contracting authorities may wish to apply the approach set out in the PPN.
For those in scope organisations that do not currently use procurement cards, they are advised to immediately put in place arrangements using the relevant Crown Commercial Service Agreement (Lot 2 of RM3828 Payment Solutions).
What does this PPN do?
This PPN provides the following advice and urges organisations to arrange with their procurement card provider to:
- Increase a single transaction limit to £20,000 for key card holders;
- Raise monthly limits on spending with procurement cards to £100,000 for key card holders; and
- Spend on procurement cards each month in excess of £100,000 should be permissible to meet business needs.
Although the above advice has been provided, should these limits not be necessary, organisations should seek an appropriate transaction limit or monthly limit.
The PPN also advises that by 30 April 2020, in scope organisations should:
- Ensure that a number of appropriate staff have the authority to use these cards; and
- Open all relevant categories of spend to enable these cards to be used more widely.
How can we help?
If you require any advice regarding current or perspective procurements, or if you would like someone to explain the impact of this new PPN on your organisation, please do not hesitate to contact a member of our team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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