Latest guidance from the EFSA on (PPN) 02/20

Latest guidance from the EFSA on (PPN) 02/20

Supplier relief due to COVID-19

Darren Rigden, Partner, Corporate Audit
Latest guidance from the EFSA on (PPN) 02/20

The additional sector guidance for state funded schools (Procurement Policy Notice (PPN) 02/20) was issued at the start of the COVID-19 crisis. The aim of the PPN 02/20 is to ensure contracting authorities (which includes academies) support suppliers at risk so that they are in a position to resume normal contract delivery once the outbreak is over. This includes putting in place the most appropriate payment measures to support supplier cashflow and provides details of what this may include. It also highlights the need to pay suppliers promptly in order to support them during the crisis. This applies until 30 June.

New guidance on PPN 20/02 was issued on 20 May 2020 by the Education and Skills Funding Agency (EFSA). Full details can be found at on the government website
It focuses in particular on three important areas:

  • helping to determine if you are a contracting authority - and therefore whether PPN02/20 applies to you
  • the overarching principles and guidance on how you may choose to review and respond to supplier requests within the scope of the PPN
  • specific guidance on school food contracts.

The ESFA has said that government will continue to provide schools with their expected funding, including funding to cover free school meals and universal infant free school meals, throughout the period of closure, until at least 30 June.  Therefore, they will be in a position to consider supporting suppliers at risk. 

The Department for Education (DfE) is putting in place an additional fund to support schools with unavoidable additional costs associated with COVID-19 that cannot be met by existing resources. For the avoidance of doubt, costs associated with supporting suppliers through PPN 02/20 will not be eligible for support through this fund.

Academy trusts will be classed as a contracting authority as the majority of their income is derived from state funding (more than 50%). Multi-academy trusts (MATs) are typically the contracting authority for all schools within the Trust.

The DfE is using a five-stage approach which is included within the most recent guidance to evaluate suppliers who fall within the scope of PPN 02/20. This is intended to provide you with guidance and principles as it will not be appropriate for all academies or MATs.

You need to ensure you apply the necessary financial and governance controls as set out in the Academies Financial Handbook for Academy Trusts.

You should keep a record of your approach and the rationale used, along with details of any payments made, assessment of risks or contractual changes, so that you have a clear audit trail in case questioned at a later date

Specific guidance is given in respect of school meals and the guidance states:

“You should, therefore, continue to make payments to food suppliers that are considered at risk in relation to the cost of free school meals and universal infant free school meals. Such payment to suppliers should be made on the basis of the previous three months’ invoices, and only where suppliers agree to act on an open book basis and make cost data available to the contracting authority. This does not apply to the costs of meals usually purchased by parents for children who are not eligible for free school meals.”

If you have any questions regarding the revised guidance or need support in interpreting this our Academies team at Crowe U.K will very pleased to help you. You can also visit our Academies page for more information.

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Darren Rigden
Darren Rigden
Partner, Audit and Business Solutions