PPN 10/23: Taking account of a bidder’s approach to payment in the procurement of major contracts · first published 23 November 2023
PPN 10/23 (Procurement Policy Note 10/23) requires central government departments, their executive agencies, and non-departmental public bodies (NDPBs) to assess how bidders handle payments when awarding contracts worth more than £5 million per year (excluding VAT). Bidders must show they pay 95% of invoices within 60 days (or 90% with an action plan), and that their average payment time across all invoices is 55 days or fewer. This replaced PPN 08/21 from 1 April 2024 — the key new element is the 55-day average payment threshold, which did not exist before. For SMEs, this matters most if you are a subcontractor or supplier to a large prime contractor bidding for government work: the prime must now prove it pays its supply chain promptly or risk being excluded. If your business is itself bidding for a £5m+/year government contract, you must also be able to demonstrate your own payment performance meets these standards.
WHO THIS APPLIES TO
THE ENKII VIEW
This policy is a protective mechanism for SMEs sitting in the supply chains of large prime contractors — it creates a contractual incentive for primes to pay subcontractors quickly or lose the bid. The new 55-day average payment threshold (added in this version) closes a loophole where a bidder could meet the 60-day rule on most invoices but drag out a minority indefinitely. SMEs bidding directly for £5m+/year contracts should treat their own payment records as bid-critical evidence, not just a finance matter.
This briefing is enkii's interpretation of the official document — the official text always governs.
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