Guidance

Supplier relief for schools

Published 3 February 2021

This guidance was withdrawn on

This content is no longer current policy and you do not need to follow it.

Applies to England

This guidance is aimed at helping maintained schools and academy trusts understand how they should support suppliers through the coronavirus (COVID-19) pandemic.

This guidance covers 2 important areas, it:

  • helps to determine if you are a contracting authority - and therefore whether this guidance applies to you
  • provides you with some overarching principles and guidance on how you may choose to review and respond to supplier requests for support

This guidance is consistent with the advice previously issued to reflect Procurement Policy Note 02/20 (expired 30 June 2020) and Procurement Policy Note 04/20 (expired 31 October 2020).

Background

To ensure service continuity during and after the coronavirus (COVID-19) pandemic, schools are advised to support their at-risk suppliers in a range of ways to ensure business and service continuity and to protect jobs.

Schools will continue to receive their core funding allocations through this period, regardless of any periods of closure or reduced operation - and will therefore be in a position to support suppliers at risk.

This guidance only applies to contracted goods, services and works contracts, such as for building works, where there is a direct relationship between the contracting authority and its suppliers under a procured contract. It does not apply to other funding mechanisms such as grants.

While contracting authorities have a responsibility to their own suppliers, this guidance is advisory only. It does not bind contracting authorities to do anything other than what they feel is appropriate under these challenging and complex circumstances.

Determining if you are a contracting authority

When considering how to implement this guidance, you first need to determine whether you are a contracting authority and, if you are, which of your suppliers may be at risk and fall within the scope of the supplier relief measures put forward in this guidance.

Maintained schools, academy trusts and non-maintained special schools will be classed as a contracting authority as the majority of their income (more than 50%) is derived from state funding. Multi-academy trusts are typically the contracting authority for all schools within the trust. Independent special schools, which may not be regarded as a contracting authority under the relevant public contract regulations, may wish to consider applying the principles in this guidance.

If you are in any doubt about whether you are classed as a contracting authority you may wish to seek your own legal advice.

Reviewing and responding to supplier requests

The DfE knows that schools and trusts are already being contacted by suppliers and that responding to their requests for relief can be complex and time consuming. The definition of ‘suppliers’ can include all organisations providing goods and services to your school, including local authorities and local authority trading services. To help you decide how best to respond to any requests, the DfE would like to share details of our approach.

The Department for Education’s 5-stage approach

The DfE has previously used the 5-stage approach below to evaluate suppliers who request relief. This approach may not work for all schools and trusts, as it reflects the complexity and scale of the DfE’s commercial arrangements, so is intended to provide you with some overarching guidance and principles as to how you could choose to support your suppliers.

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 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 a service or good(s) that are critical to your school in the medium and long term, and are important to business continuity to provide relief against the contract. This may include an assessment of whether the supplier was meeting contract performance standards before service delivery was disrupted.

Stage 3: Assessment of whether the supplier is financially ‘at risk’ as a result of coronavirus (COVID-19)

In principle a supplier is deemed at risk where they are unable to fulfil the contractual obligations of a contract due to coronavirus (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, 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)
  • taking a more reasonable view on 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 coronavirus (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 - such as paying reconciled invoices before their due date

If you do choose to make any commercial or financial interventions, you need to make sure they are documented, using the change control clauses contained in the contracts, even if this takes place retrospectively. The Cabinet Office developed a series of model clauses to support Procurement Policy Note 02/20 (expired 30 June 2020) that may be useful.

You also need to work in partnership with the supplier to plan an exit from the agreed interventions and transition to a new, sustainable, operating model. Read the Transition planning section of this guidance.

There are a number of other important points to note when considering how best to implement this guidance for your school or trust:

  • whatever approach you decide best meets your needs, you need to ensure you apply the necessary financial and governance controls as set out in Schemes for financing local authority maintained schools and the Academies financial handbook
  • maintained schools should also get advice from their local authorities on how they are supporting their suppliers especially where you are accessing supplier contracts that they manage
  • suppliers should not expect to make profits on elements of a contract that are undelivered during this period and all suppliers are expected to operate with integrity. Suppliers receiving relief should agree 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
  • any relief payments to suppliers can be used to help cover non-furloughed staff costs and other non-staff expenses only. Relief payments must not be used to cover costs associated with staff furloughed under the Coronavirus Job Retention Scheme
  • 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 and retained afterwards for any future audit purposes

Transition planning

If you have agreed to any form of supplier relief (commercial or financial interventions mentioned above) you should immediately work with the supplier to develop a transition plan ready to be implemented as soon as possible.

This transition plan should be agreed by both parties and should include the following:

  • a planned exit date for when any supplier relief will end; this should be kept under review to reflect the changing situation
  • if advanced payments have been made, the parties should agree if and when any outstanding goods or services are to be delivered
  • the process for reconciling payments made against costs
  • an assessment of any costs associated with implementing Public Health England guidance specifically in relation to delivering the public contract. This should be considered by the authority on a case-by-case basis
  • an assessment as to whether, as a result of coronavirus (COVID-19), the contract is still relevant and sustainable and, if not, proposals for variation or termination

In some instances, you may decide that a contract is no longer relevant or sustainable. In these circumstances, the contracting authority and the supplier should discuss alternative options, for example applying a contract variation. Ultimately, it may be necessary for the parties to discuss contract termination.

School food contracts and supply teachers

Please read the specific guidance on school food contracts and supply teachers and other contingent workers.