Procurement: PPN 04/19 Taking account of a supplier’s approach to payment in the procurement of major contracts

The Cabinet Office has published Procurement Policy Note PPN 04/19 “Taking account of a supplier’s approach to payment in the procurement of major contracts” (23 July 2019).  This replaces PPN 04/18.

Two supporting documents have been published together with PPN 04/19

- Guidance with Annex A setting out the Selection Questions
- Frequently Asked Questions

PPN 04/18, dated 29 November 2018, introduced new questions to be incorporated within section 6.2 of the standard selection questionnaire (SQ) or added to PAS91[1]. From 1 September 2019, in-scope organisations[2] must use these SQ questions (now updated) to assess a supplier’s approach to payment when procuring major contracts. “Major projects”, in this context, means works, supplies or services contracts with an anticipated contract value above £5 million per annum (excluding VAT).

The focus of the SQ questions is on the assessment of effective payment systems to ensure reliability of the supply chain.  Use of these questions is mandatory, save in exceptional circumstances where it would not be relevant or proportionate to do so. PPN 04/19 provides examples of “exceptional circumstances”.

There are some notable differences between PPN 04/18 and PPN 04/19: The number of standard SQ questions has been reduced and the wording of some of the questions is changed.  The Guidance is more detailed than previously and includes evaluation methodologies to be applied when assessing performance on invoices paid, in certain cases. The number of FAQs has increased from 12 to 25 and includes new or substantially expanded sections on statutory reporting requirements, invoices, action plans and the Prompt Payment Code.

PPN 04/19 applies to framework agreements and dynamic purchasing systems where it is anticipated that the anticipated value of the contracts awarded under the framework agreement or dynamic purchasing system will be in excess of £5 million per annum (excluding VAT). This is a change from the provisions in PPN 04/18 which was stated to apply only where the value of each contract was anticipated to be in excess of £5 million per annum (excluding VAT).

You can access the full PPN and supporting documents from the PPN website.

[1]           For background only, see our original note on PPN 04/18

[2]             In-scope organisations, for the purposes of PPN 04/19, are all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies.