Guidance Supplier relief due to COVID-19: Procurement Policy Notice (PPN) 02/20 – additional post-16 educational sector guidance
Determining if you are a contracting authority
The Department for Education’s 5-stage approach
The DfE has chosen to take a 5-stage approach to evaluate its own suppliers
who fall within the scope of PPN 02/20. This approach, which reflects the
complexity and scale of the DfE’s commercial arrangements, is intended to
provide you with some overarching guidance and principles as to how you could
choose to implement the PPN.

stage 1: Assessment of whether the supplier has considered other measures announced by the government: This involves asking if they have explored and applied for, as applicable, all other forms of support available to them, including the wider government business support schemes. This is to avoid duplication of funding, such as providing both supplier relief under PPN 02/20 and payment of related workers that have been furloughed under the Coronavirus Job Retention Scheme (CJRS)
stage 2: Assessment of whether they are a critical supplier to your organisation: The main consideration here is whether you feel the supplier provides services, goods or works that are critical in the medium and long term, and are important to business continuity to provide relief against the contract
stage 3: Assessment of whether the supplier is financially ‘at risk’ as a result of COVID-19: In principle, a supplier is deemed at risk where they are unable to fulfil the contractual obligations of a contract due to COVID-19 and are experiencing financial difficulties as a result
stage 4: Commercial interventions to manage supplier: It is important that commercial judgement is used when considering the type of support available pursuant to the PPN, which could include: 
payments for previously anticipated volumes (even if not met), or for the advanced order of materials where appropriate
continuing to pay for services to suppliers who give their best endeavours to continue delivery despite performance being somewhat affected
considering an extension of time for contract performance (for example, revised milestones or delivery dates)
adjusting agreed lead times which despite best endeavours might not be met by suppliers and ensure their payments are not negatively affected by that
consider supplementing service delivery through your own resources, though this is likely to be difficult, but may help alleviate the challenges the supplier is suffering as a result of COVID-19


stage 5: Financial interventions: As with the commercial interventions, financial judgement should be used when considering any of the suggested options below: 
variation of payment mechanism - specifically beneficial where contracts are based upon the delivery of outcomes or outputs, you can vary the payment mechanisms to provide greater short term cash flow to the supplier, for example, moving from payments on delivery of services, works or goods to aligning payments to the costs being incurred by the supplier, or breaking down milestone payments into multiple smaller payments
increasing speed of payment - this PPN seeks to expedite this process and adjust normal financial controls, such as paying reconciled invoices before their due date
prepayment of up to 25% of contract value - this specifically targets immediate cash flow issues, but potentially creates a cash flow issue at a later date in the contract, so should be considered accordingly. For example, releasing a proportion of retained funds on capital projects, ahead of actual defects being identified and remedied



It is important that any commercial or financial changes or variations to
contracts should be agreed in accordance with the change control clauses
contained in the contracts, and documented, even if this takes place
retrospectively. The Cabinet Office has developed a series of model clauses
pertaining to
COVID-19.
There are a number of other important points to note when considering how best
to implement PPN 02/20 for your organisation:

whatever approach you decide best meets your needs, you need to ensure you apply the necessary financial and governance controls applicable to your organisation
the PPN is very clear about the importance of transparency, and suppliers agreeing to act on an open book basis and make cost data available to you during this period, so please ensure they do so where relevant
keeping a record of your agreed approach and supporting rationale, along with details of any payments made, assessment of risks or contractual changes, is important to show that you have an audit trail. This needs to be maintained throughout the period the PPN applies and retained afterwards for any future audit purposes.

[DfE]: Department for Education
  [PPN]: Procurement Policy Notice