PPN 015: How to take account of a supplier's approach to payment in the procurement of major contracts · first published 3 December 2024
PPN 015 requires central government departments, their executive agencies, and non-departmental public bodies (NDPBs) to assess how well a supplier pays its own supply chain before awarding contracts worth over £5 million per year (including VAT). Suppliers must show they pay 95% of invoices within 60 days (or 90% with an action plan) and settle all invoices within an average of 55 days. Buyers must use a standard set of questions called the Procurement Specific Questionnaire (PSQ) to check this. Suppliers that cannot demonstrate effective payment systems can be excluded. This policy replaced PPN 10/23 from 24 February 2025 and applies to procurements advertised on or after that date under the Procurement Act 2023.
WHO THIS APPLIES TO
THE ENKII VIEW
This policy is directly designed to protect small businesses in supply chains — the government explicitly links it to unlocking £20 billion in unpaid invoices. For SMEs subcontracting under a prime supplier, it creates a new lever: the prime must prove it pays promptly or risk losing the contract. For SMEs bidding as the prime supplier, payment performance is now a formal pass/fail gate on large contracts, so internal payment processes are part of bid readiness. Wider public sector bodies are encouraged (but not required) to adopt the same approach, so the effect could spread beyond central government.
1. Check your payment data now: you must show 95% of your invoices are paid within 60 days and all invoices average 55 days or fewer. If you fall short of 95% but hit 90%, prepare a credible written action plan to submit with your bid.
SMEs bidding as prime supplier on central government contracts ≥£5m/year — Buyers must use the PSQ to assess these exact thresholds — suppliers that cannot demonstrate compliance can be excluded from award.
2. Download the Procurement Specific Questionnaire (PSQ) and complete a dry run against your own payment records before any live procurement, so you know where gaps are and can address them in advance.
SMEs bidding as prime supplier on central government contracts ≥£5m/year — In-scope organisations are required to use PSQ questions; being prepared avoids a surprise exclusion at selection stage.
3. Check whether the individual call-off contracts under a framework you're targeting are expected to exceed £5m/year — if so, the payment performance rules apply to you even if the framework itself is smaller.
SMEs bidding on framework agreements or dynamic markets — The PPN applies at the individual call-off level, not the framework total: a framework with large individual contracts triggers full compliance requirements.
4. Use this policy as leverage in negotiations with prime suppliers: primes must demonstrate strong payment practices to win the contract, so you can reference PPN 015 when pushing for prompt-payment terms in your subcontract.
SMEs subcontracting under a prime supplier on large central government contracts — The PPN was explicitly designed to unlock £20 billion in unpaid invoices and support small businesses in supply chains; a prime's compliance depends partly on how it treats subcontractors.
5. If you bid for contracts outside central government (e.g. local authorities, housing associations), monitor whether those buyers adopt this PPN voluntarily — it is encouraged but not required, and some may start applying the same payment-performance questions.
All SMEs bidding for public contracts — The document explicitly states that 'other public sector contracting authorities may wish to apply the approach', so the standard could spread beyond central government.
Every rule below quotes the official document verbatim.
This PPN applies to central government departments, their executive agencies, and non-departmental public bodies (NDPBs) — referred to as 'in-scope organisations'. (In-scope organisations (central government departments, executive agencies, NDPBs))
“This PPN applies to all central government departments, their executive agencies and non-departmental public bodies. These are referred to as 'in-scope organisations'.”
NHS trusts and contracting authorities whose functions are devolved to Scotland, Wales or Northern Ireland are explicitly excluded. (NHS trusts and devolved contracting authorities)
“this PPN does not apply to NHS trusts or to contracting authorities whose functions are devolved or mainly devolved functions of Scotland, Wales or Northern Ireland.”
The PPN applies to contracts with an expected value above £5 million per year (including VAT), averaged over the life of the contract. (In-scope organisations, contracts for goods/services/works except special regime contracts)
“In-scope organisations should take action to apply this PPN when awarding public contracts for goods and/or services and/or works, other than special regime contracts, with an expected contract value above £5 million per year (including VAT)”
For framework agreements and dynamic markets, the £5m/year threshold is assessed at the level of individual contracts awarded under the framework, not the framework itself. (Framework agreements and dynamic markets under in-scope organisations)
“This PPN applies to framework agreements and dynamic markets only where it is estimated that the individual value of any individual contract to be awarded under the framework agreement or dynamic market is greater than £5 million per year (including VAT).”
A four-year contract with a total value of £21 million is in scope even if its first-year value is under £5 million, because the average annual value exceeds the threshold. (All in-scope contracts where averaging applies)
“a contract with a four-year term with a total contract value of £21 million would be in scope, even if the value in the first year was under £5million”
Suppliers must demonstrate they pay 95% of invoices within 60 days (or 90% with an action plan) and pay all invoices within an average of 55 days. (All suppliers bidding for in-scope contracts ≥£5m/year)
“The questions require suppliers to demonstrate they are paying 95% of invoices within 60 days (90% with an action plan), and also paying all their invoices within an average of 55 days.”
Buyers must use the Procurement Specific Questionnaire (PSQ) to assess supplier payment practices; suppliers that cannot demonstrate effective payment systems can be excluded. (In-scope organisations and suppliers bidding for contracts ≥£5m/year)
“in-scope organisations must use the questions in the Procurement Specific Questionnaire (PSQ)... when it would be appropriate to exclude those suppliers that cannot demonstrate they have effective systems in place.”
The PPN applies to procurements advertised on or after 24 February 2025 under the Procurement Act 2023. (In-scope organisations)
“In-scope organisations must apply the provisions of this PPN in relevant procurements advertised on or after 24 February 2025”
Exceptional circumstances exist where it may not be relevant or proportionate to apply this PPN, and an exemption request process is available. (In-scope organisations)
“except where, in exceptional circumstances, it would not be relevant or proportionate to do so having regard to the nature, cost and complexity of the contract.”
Other public sector contracting authorities (outside central government) may voluntarily apply this PPN but are not required to. (Wider public sector (voluntary))
“Other public sector contracting authorities may wish to apply the approach set out in this PPN.”
The policy is linked to the government's aim of unlocking £20 billion in unpaid invoices as part of its Plan for Small Businesses. (All in-scope contracts)
“This PPN will help to unlock £20 billion in unpaid invoices and ensure small businesses are supported more widely by encouraging better cash flow, enabling them to more easily invest in their own growth.”
This briefing is enkii's interpretation of the official document — the official text always governs.
Source document © Crown copyright, reused under the Open Government Licence v3.0 via the GOV.UK Content API. enkii tracks every Procurement Policy Note and briefs changes the day they land — see all briefings.