18 May 2020

How should maintained schools and academy trusts apply government guidance on Supplier Relief during the Covid-19 pandemic?

Government guidance issued at the outset of the pandemic (PPN 02/20: Supplier Relief due to Covid-19) set out the way in which contracting authorities should offer financial support to suppliers, including those whose ability to provide goods and services during the pandemic has been reduced or completely cut off.  If you operate a maintained school or academy trust, updated guidance has now been issued to help you understand how PPN 02/20 applies to you.

The guidance covers three main areas.

1. Does PPN 02/20 apply to us?

The guidance applies to “contracting authorities”.  That will include maintained schools, academy trusts and non-maintained special schools as the majority of their income (more than 50%) is derived from state funding. In practice, Multi-academy trusts will be the contracting authority for all schools within the trust.

It sets out guidance around payments to be made by contracting authorities to “suppliers”.

In practice this could be any organisation which provides goods and services to your school.

2. How should we review and respond to supplier requests under PPN 02/20?

The guidance recognises that contractual arrangements are complex and there is no “one size fits all”.  Therefore there is a five-stage approach has been designed to help you evaluate whether you should offer any your suppliers additional support at this time and, if so, what that additional support might look like:

  • You must ascertain whether the supplier has already taken advantage of any other available government support (eg Coronavirus Job Retention Scheme). If they have they are ineligible for Supplier Relief under PPN 02/20.
  • You should consider whether a supplier is “critical” to the continued operation of the school in the medium/long term (even if demand for their goods or services is presently reduced).
  • You should ascertain whether the supplier is genuinely “at risk” in the sense they are experiencing financial difficulties as a consequence of Coronavirus.
  • You should assess what commercial interventions might be appropriate. For example extending time for performance of the contract or maintaining normal payment levels notwithstanding reduction in goods/services.
  • Finally you should consider what financial interventions might be appropriate. For example expedited payment terms or revised payment mechanisms or making pre-payments (of up to 25% of contract value).

3. What is the specific guidance on food contracts?

Given its importance, PPN 02/20 includes specific guidance on payments to be made to food suppliers required to assist with the provision of free school meals. In particular:

  • Payments to food suppliers considered to be “at risk” should be made on the basis of the previous 3 months’ invoices; and
  • In return (and in line with the wider PPN 02/20 guidance), food suppliers must act on an “open book basis” and ensure that cost data is readily available to you.

The guidelines are just that, and are not mandatory, however there are some limitations and qualifications around various elements of PPN 02/20.  If you would like any more information regarding the issues in this note, or in relation to the guidelines more generally, please contact Clare Murphy.

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Clare Murphy, Partner

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