Supporting Suppliers During Coronavirus (covid-19) Outbreak

28th March 2020

Economy Secretary announces help for companies.

New guidance has been published for public sector organisations to support suppliers during the coronavirus outbreak. This includes:

modifying terms of contracts to offer contractors relief

agreeing interim payment proposals and modifications to current contracts

accelerating payment practices to ensure suppliers are paid as quickly as possible

In a letter to public sector organisations, Economy Secretary Fiona Hyslop said:

"The current outbreak of COVID-19 is already having a significant impact on businesses of all sizes. Many suppliers will struggle to meet their contractual obligations and this will put their financial viability, ability to retain staff and their supply chains at risk.

"Public bodies should act now to support their suppliers so they are better able to cope with the current crisis and to resume normal service delivery and fulfil their contractual obligations when the outbreak is over.

"This guidance provides a suggested template document that public bodies may wish to use when liaising with suppliers to agree interim payment proposals and modifications to current contracts.

"Public bodies should now aim to accelerate their payment practice to ensure payment is made as quickly as possible to their suppliers.

"The national endeavour to get us through this health crisis will require an unprecedented economic response shared collectively, deliberately and with purpose - by business, the public sector, unions, workers and the public."

The full text of the letter reads:

COVID-19 continues to affect all our daily lives, and the lives of people working in our supply chains.

On Wednesday, the STUC General Secretary Grahame Smith and I issued a joint statement outlining the shared commitment to fair work practices in Scotland, calling on employers, trades unions and workers to work together to ensure workers are treated fairly. A copy of the statement is available at: https://www.gov.scot/news/protecting-workers-during-coronavirus-outbreak/

I wrote yesterday to urge employers to look at maintaining jobs and paying their workers throughout this crisis, making use of Government support to achieve this. I highlighted the need for Partnership Working, with a particular focus on ensuring that we continue to apply Fair Work Principles.

The current outbreak of COVID-19 is already having a significant impact on businesses of all sizes. Many suppliers will struggle to meet their contractual obligations and this will put their financial viability, ability to retain staff and their supply chains at risk.

I am writing to you to draw your attention to procurement guidance on options that public bodies can take to provide supplier relief under existing public contracts and I would urge public bodies to consider what they can do to support their supply chains.

https://www.gov.scot/publications/coronavirus-covid-19-supplier-relief/

Public bodies should act now to support their suppliers so they are better able to cope with the current crisis and to resume normal service delivery and fulfil their contractual obligations when the outbreak is over.

It is the view of the Scottish Government that, at this time, the grounds for modifying a contract set out in regulation 72 of the Public Contracts (Scotland) Regulations 2015 exists and public bodies should consider using this ability to modify payment terms of contracts, where to do so will offer suppliers relief under the terms of their contract.

This guidance provides a suggested template document that public bodies may wish to use when liaising with suppliers to agree interim payment proposals and modifications to current contracts.

Procurement guidance has already been published on handling some procurement related issues as a consequence of the COVID-19 outbreak. It provides information on options available to purchasers in these circumstances.

https://www.gov.scot/publications/procurement-regulations-during-covid-19-outbreak-sppn-4-2020/

This is also a time when we can help with cash flow concerns and in turn protect jobs. Public bodies should now aim to accelerate their payment practice to ensure payment is made as quickly as possible to their suppliers.

I do appreciate that these are challenging circumstances and Ministers all recognise the collective work being undertaken across all public bodies to respond to this situation and want to take this opportunity to thank you for everything you are doing at this time.

The national endeavour to get us through this health crisis will require an unprecedented economic response shared collectively, deliberately and with purpose - by business, the public sector, unions, workers and the public.

FIONA HYSLOP