Providers need to be alive to the risk of contractors becoming insolvent and how to limit the resulting inevitable disruption.
- the proportion of invoices (but only those payable to the contracting authority’s direct contractors) that were paid within 30 days (based on numbers of invoices, rather than their value);
- interest accrued due as a result of non-payment within 30 days (at 8% above Bank of England base rate for most contracting authorities under the Late Payment of Commercial Debts (Interest) Act 1998 and the Regulations made under it); and
- interest actually paid on late payments.
The PPN can be found here.
The obligation to keep the information available “on the internet” is in Regulation 113 of the Public Contracts Regulations 2015. Performance data for the financial year 2015/16 has to be kept available throughout 2016/17.
Regulation 113 includes an obligation to “have regard to Cabinet Office guidance” which can be found here.
The Guidance says that, for 2015/16, there is no need to publish details of “interest accrued due”. Although there is no authorisation within the Regulations for this relaxation, in practice it is unlikely that a contracting authority will be challenged if they follow the guidance. For 2015/16, therefore, all that it is necessary to publish is the percentage of invoices paid within 30 days and interest actually paid on late payments.
Although the PPN does not add anything to the statutory obligations, it is a timely reminder of the need to comply with them.
The PPN warns that spot compliance checks will be made by the Mystery Shopper service. Since this will just involve looking at the contracting authority’s website, contracting authorities that have not complied should expect a call from them.
Contracting authorities should also ensure that they have complied with the requirement to “cascade” the 30 day payment provisions down their supply chain. All contracts should now include obligations on contractors to pay their subcontractors within 30 days (and to require their subcontractors “of any tier” also to do so).
Contracting authorities should be checking their purchase terms, standard contract conditions, standard form building contracts they use, development agreements (where they are public contracts), ICT contracts, contracts called-off from frameworks set up under the 2015 Regulations and other contracts to ensure they include these provisions.
For more information
Please contact Andrew Millross.
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