Procurement Policy Note 02/20 – CHIC’s Advice Note

The PPN sets out information and guidance for public bodies (i.e. those required to comply with public procurement regulations) on the payment of contractors and suppliers. The principle purpose is for contracting authorities to ensure that suppliers continue to be paid during the period of disruption caused by COVID-19, so that they are in a position to resume normal contract delivery once the coronavirus outbreak is over.

Action required

All contracting clients, which we believe includes all of CHIC’s members, are required to:

  • Urgently review their contract portfolio and inform suppliers, who they believe are at risk, that they will continue to be paid as normal (even if service delivery is disrupted or temporarily suspended) until at least the end of June.
  • Put in place the most appropriate payment measures to support supplier cash flow; this might include a range of approaches such as forward ordering, payment in advance/prepayment, interim payments and payment on order (not receipt).
  • If the contract involves payment by results then payment should be on the basis of previous invoices, for example the average monthly payment over the previous three months.
  • To qualify, suppliers should agree to act on an open book basis and make cost data available to the contracting authority during this period. They should continue to pay employees and flow down funding to their subcontractors.
  • Ensure invoices submitted by suppliers are paid immediately on receipt (reconciliation can take place in slower time) in order to maintain cash flow in the supply chain and protect jobs.

The Procurement Policy Note has taken effect immediately and is to apply until 30th June 2020.

CHIC’s response and guidance

CHIC’s interpretation of PPN 02/20 is that it will apply to most, if not all contracts, which are accessed through CHIC and that CHIC continues to support. In short, government is seeking to ensure that payments flow to contractors and all other suppliers directly.

The businesses throughout the supply chain will then have enough income to meet costs, particularly for salaries and direct overheads. This will keep people employed and avoid undue hardship and ensure that all businesses are able to resume normal activities and support their clients as soon as the outbreak is over.

A few specifics:

  • Invoices from contractors and suppliers should be set at normal levels (month to month). Invoices need to separate amounts relating to services continuing through the outbreak (i.e. business as usual) and those accredited to the impact of COVID-19.
  • Payments should only relate to existing contracts, where there is a commitment to provide services or supplies.
  • Contractors and suppliers must operate on an ‘open book’ basis and must make available all supporting information required and requested to demonstrate the payments made are being used to support their staff and supply chain.
  • Contractors and suppliers are not permitted to make profit on any charges invoiced under these arrangements
  • A key government objective seems to be to avoid contractual disputes emerging and ensure contracting authorities continue to support their direct supply chain, enabling the supply chain to support 3rd tier suppliers involved in the ultimate supply and delivery of services.
  • Once the outbreak is over and normal services can resume, businesses remain viable and spend by the contracting authorities should be equal to or less than the contractual commitments over the 3-4 months to the 30th

How can CHIC help?

CHIC can help both members and our supply chain partners in a number of ways:

  • We have detailed knowledge of regular spend patterns under all contracts called off from CHIC. We can provide this data rapidly to establish spend patterns that justify invoicing levels during this relief period
  • We have tendered data on all contractors and suppliers profit levels
  • We can therefore support both members and the supply chain to agree what amounts should be invoiced monthly under PPN 02/20, which justifies to the level of payment being made and deduct any profit element as expected
  • We can assist with the processing of payments – PPN 02/20 expects clients to process payments efficiently, without challenge, to ensure that cash flows are sustained across the economy
  • Where there is uncertainty or disagreement about whether the payments are justified, or an amount to be invoiced, we can provide further ‘open book’ support

Next steps

CHIC’s Account Managers will be in touch with all members to discuss individual live contracts in the immediate future. They will want to agree how PPN 02/20 applies to each contract and to understand where we can provide further assistance to ensure that the Cabinet Office guidance is effectively implemented.

CHIC’s commercial team will be in touch with all of our supply chain partners, where there are current live contracts, to understand how they expect to respond to PPN 02/20 and provide what assistance we can to support their interactions with our members.

In common with most businesses across the country the CHIC team are now home based but working hard to stay in touch and continue to support all our members. Email and mobile phone contact details with key members of the team are set out below:


John Fisher, Managing Director

07702 230489 |

Luke Hurd, Commercial Director

07497 044014 |


Victoria Speakman, Senior Account Manager

07793 071784 |

Stephen Sharman, Senior Account Manager

07468 697612 |

Giles Newman, Head of Merchant Services

07387 260544 |

Amelia McCann, Head of Development (BuildSmart)


Marius Marisca, Supply Chain Manager

07864 677672 |

Joe Scurr, Supply Chain Assistant Manager

07468 697613 |

Martin Radbourne, Commercial and Contract Manager

Any questions on this communication or for further information, please contact Curtis Coulson