Procurement Policy Note 08/21 - Taking account of a bidder's approach to payment in the procurement of major government contracts · first published 20 October 2021
PPN 08/21 set out how central government buyers had to assess a bidder's payment practices when awarding major contracts worth over £5 million per year (excluding VAT). It required buyers to include payment-system questions in the standard selection questionnaire, and allowed poor-paying bidders to be excluded. The note replaced PPN 07/20 and applied from 1 April 2022. However, it has itself now been replaced by PPN 10/23 (updated April 2024), meaning its specific rules are no longer the live standard. Small businesses should look to PPN 10/23 for the current requirements on payment practices in government procurement.
WHO THIS APPLIES TO
THE ENKII VIEW
Because this PPN is superseded by PPN 10/23, acting on its specific thresholds or question formats could mean preparing against out-of-date criteria. The underlying principle — that government uses payment behaviour as a supply-chain reliability gate — remains live and important for SMEs (small and medium-sized enterprises), since prompt payment down the supply chain directly protects smaller subcontractors. SMEs should treat this document as historical context only and focus their preparation on PPN 10/23.
1. Disregard PPN 08/21's specific rules and thresholds — find and read PPN 10/23, which is the live standard for payment-practice assessments in major government procurements.
All SMEs bidding on central government contracts above £5m per annum — The document's own GOV.UK status confirms 'guidance documents are now out of date and have been replaced by PPN 10/23', so preparing against PPN 08/21 criteria risks misalignment with current buyer requirements.
2. Ensure your business can evidence prompt payment practices throughout your supply chain — keep records of payment terms offered to subcontractors and actual payment performance data — as this remains a selection-stage gate under the successor policy.
SMEs acting as prime contractors or subcontractors on central government contracts — The core principle — that buyers can exclude bidders with poor payment systems — carries forward into PPN 10/23; having clean, documented payment records now reduces risk at selection stage.
Every rule below quotes the official document verbatim.
The PPN applies to all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies (NDPBs); it does not apply to NHS trusts or devolved-function contracting authorities. (Central government departments, executive agencies and NDPBs only)
“This PPN applies to all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies... 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 procurements with an anticipated contract value above £5 million per annum (excluding VAT), averaged over the life of the contract. (In-scope organisations procuring under Public Contracts Regulations 2015)
“procuring goods and/or services and/or works with an anticipated contract value above £5 million per annum (excluding VAT)... a contract with a 4 year term with a total contract value of £21m would be in scope, even if the value in the first year was under £5m.”
In-scope organisations must apply this PPN to relevant procurements advertised on or after 1 April 2022. (In-scope organisations; procurements advertised from 1 April 2022)
“In-Scope Organisations must apply the provisions of this PPN in relevant procurements advertised on or after 1 April 2022.”
Buyers must include payment-system assessment questions as sub-questions within section 6.2 of the standard selection questionnaire (SSQ). (In-scope organisations on contracts above £5m per annum (excl. VAT))
“In-Scope Organisations must use the questions as sub-questions within section 6.2 of the standard selection questionnaire.”
Bidders that cannot demonstrate they have effective payment systems in place may be excluded from a procurement. (All bidders on in-scope procurements above £5m per annum (excl. VAT))
“when it would be appropriate to exclude those bidders that cannot demonstrate they have effective systems in place.”
The PPN applies to framework agreements and dynamic purchasing systems (DPS) only where individual call-off contracts are anticipated to exceed £5 million per annum (excluding VAT). (Framework agreements and DPS let by in-scope organisations)
“This PPN applies to framework agreements and dynamic purchasing systems only where it is anticipated that the individual value of any contract to be awarded under the framework agreement or dynamic purchasing system is greater than £5 million per annum (excluding VAT).”
PPN 08/21 has been replaced by PPN 10/23 and the guidance documents are described as out of date. (All users of PPN 08/21)
“This Procurement Policy Note (PPN) and guidance documents are now out of date and have been replaced by PPN 10/23.”
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.