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Government sets out payment terms for its major contracts

Monday 1st February, 2021

From 1st April 2021, companies that fail to pay 85% of their invoices within 60 days will be excluded from bidding for major central government contracts.

This comes after the government published a Procurement Policy Note (PPN) which sets out how payment approaches can be taken into account in the procurement of major Government contracts.

The PPN applies to all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies. These organisations are referred to in the PPN as ‘In-Scope Organisations’.

In-Scope Organisations should use this PPN when procuring goods, services or works with an anticipated contract value above £5 million per annum (excluding VAT), subject to the Public Contracts Regulations 2015.

In its 2017 Manifesto, the Government stated that it would ‘use our buying power to ensure that big contractors comply with the Prompt Payment Code both on government contracts and in their work with others’.

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