Is your governance around the PPN 02-20 adequate?

Here are some tips for your Trust to ensure you have been fully compliant with the Procurement Policy Note 02-20 (PPN) in the rush to get everything sorted for Covid-19 and Easter. Hopefully as you come up for air you will have time to ensure that all decisions that have been made are properly documented. We have set out below some key areas where decisions that have been made need to be properly evidenced in a written form, together with a few other areas that must not be ignored.

The PPN 

What do you need to document:

• The accounting officer must demonstrate they are satisfied that value for money has been achieved for all payments in advance of need for the supply of critical services (paragraph 8). In normal instances managing public money prohibits payment in advance of need and will treat this as a novel and contentious transaction.
• Risks associated with advance of prepayments should be carefully considered and documented (pg 3).
• The Academy should keep records of decisions and agreements made and ensure suppliers maintain records to enable future reconciliation (Pg 4).
• Why you have paid disputed invoices (Pg 6).
• If you have taken the approach of a two-way matching based on risk (rather than a regular three-way matching against receipt and purchase order).
• If necessary document the approval of additional staff within the scheme of delegation to have the authority to authorise payments.
• If you have paid an invoice that has minor administrative errors then this must be documented. The errors must be reconciled at a later stage.
• If you are using payment cards in more situations, make sure authorisation limits are fully documented and authorisation is fully evidenced (pg 7).
• The Academy has not paid any of the following on a contract:

o    Any profit margin 
o    Payment where there is no contractual volume commitment.
o    Payments to suppliers who are underperforming and subject to an existing improvement plan unless carefully justified

Don’t forget that the contract should return to its original terms as soon as the impact of the COVID-19 outbreak on the relevant contract is over (Pg 5). Also, Pg8 states that payments in advance of need are capped at 25% of the value of the contract and can only apply until the end of June 2020. You should carefully consider your catering contracts (and others) on this basis due to lower values during school holidays distorting annual contract value.

PPN model interim payment terms

• This document should be used to prevent a supplier claiming separate relief from another source of government financial support on COVID-19 to ensure they do not obtain an undue advantage by claiming relief twice for the same hardship.
• By using the model payment terms you can check that the supplier has in fact complied with the proposals it put forward for the interim payment relief.
• Do not forget that any relief given to the supplier is at the discretion of the Academy and Trusts should not be pressurised into making a payment that they fundamentally think is not in the spirit of the guidance.
• Beware though, the model interim payment terms can only be used where there is a lawful basis for agreeing a variation under the public contracts regulations 2015 and/or any applicable procurement rules – we recommend if you are unsure about this that you take legal advice in this respect. It may be worth considering taking joint legal advice with other academies if you have the same contract with the same supplier.
• You should request full records and a written audit trail of all interim payment proposal activity in line with paragraph 6.5.5. Paragraph 6.6.1 makes it clear that the supplier cannot include any profit in the interim payment proposal so you should carry out your checks to ensure this has not happened.

PPN FAQ s

• Q11 if the supplier has not been able to ensure service continuity despite receiving an advance payment then the academy must discuss the next steps with the supplier. The academy should not simply pay for something they have not received and should consider a future clawback of monies paid by delivery will not be made in the future. This should be decided on a case by case basis (Q15)

FSM guidance 

• State schools are not meant to make payments to catering suppliers for meals usually purchased by parents for non FSM pupils 

Financial support guidance - furlough

• A Trust needs to be able to demonstrate why staff have been furloughed. We suggest you create a table with staff names and justification. 
• Schools should first seek to make savings from their existing budget or consider options to redeploy these staff before furloughing them. Only after all options have been fully considered should schools furlough those members of staff and seek support through the CJRS