‘Business as usual’ approach to operators’ payments from LAs?

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The prospect of operators continuing to be paid by local authorities on a ‘business as usual’ basis until at least 30 June has been raised in a Procurement Policy Note. It was issued by the Cabinet Office and applies to all public sector contracting authorities (CAs).

CAs should urgently review their contract portfolio and inform suppliers that are “at risk” that they will be paid while service delivery is disrupted or suspended. They should also use “the most appropriate” payment measures to support supplier cashflow.

“It is vital that CAs pay all suppliers as quickly as possible to maintain cashflow and protect jobs,” says the document. Future invoices should be paid immediately on receipt, the note continues.

Suppliers receiving public funds on the above basis must agree to act in an ‘open book’ manner and make cost data available to the CA. They should continue to pay employees and subcontractors.

“CAs should… continue to pay suppliers at risk due to coronavirus COVID-19 on a continuity and retention basis. They can consider making advance payments,” says the note. The risk of a supplier becoming insolvent despite receiving payments should be managed “on a case by case basis.”

A reference to home-to-school transport says that where educational establishments are closed, CAs “should seek to redeploy the capacity of [transport] suppliers to other areas of need.”

Where invoices are disputed, the document advises that payment should be made and reconciled later in “critical situations.” Suppliers should also be encouraged to invoice more regularly.

It is understood that even before the release of the Note, many CAs had indicated that they would continue to pay for home-to-school work in accordance with contracts until services resume.

Less clear is what will happen with private schools. One operator that serves three such establishments has received differing answers on what it will be paid while services are suspended.

“One will support us minus a fuel allowance. One will pay 50% until summer half term and then reassess. I am waiting for the other to respond. I have heard of some that will not pay anything,” its MD says.