DWP letter on prompt payment

DWP has written to contractors to remind them of their responsibility to pay subcontractors promptly. BASE has met recently with DWP Commercial and has agreed an ongoing dialogue about commissioning and provider management issues.

More indepth information about the Employment & Health Related Services Umbrella Agreement (EHRSUA), The Outsourcing Playbook and Supplier Code of Conduct  is available on our Knowledge pages.

 

The Government understands the importance of prompt, fair and effective payment in all businesses. Being paid promptly for work done ensures businesses have a healthy cash flow. 

The Department takes its own obligations on prompt payment requirements very seriously and is working hard on ensuring its own policies, procedures and processes fully support its prompt payment obligations.

As part of this activity DWP is examining whether its contracts fully comply with the requirements of Regulation 113(2) of the PCR (please see Annex 1). Regulation 113(2) requires DWP to ensure that its contracts with providers contain certain terms relating to prompt payment (the “prompt payment terms”).

Where DWP has not expressly included all the prompt payment terms in its contracts with providers, then Regulation 113(6) works to imply any missing terms into the contracts.

Your contracts with DWP contain obligations to include the same prompt payment terms in any contracts you enter into with sub-contractors. Could we please ask you to examine your own contracts with your sub-contractors to ensure you are fully compliant with these obligations. The Department is passionate about ensuring its providers and their supply chain are paid promptly, and expects providers to fully comply with obligations relating to the prompt payment terms.

This message will be reinforced in the next CD Employment Category Newsletter.

 

Annex 1

Regulation 113(2)

(2) Contracting authorities shall ensure that every public contract which they award contains suitable provisions to require the following:—

(a) that any payment due from the contracting authority to the contractor under the contract is to be made no later than the end of a period of 30 days from the date on which the relevant invoice is regarded as valid and undisputed;

(b) that any invoices for payment submitted by the contractor are considered and verified by the contracting authority in a timely fashion and that undue delay in doing so is not to be sufficient justification for failing to regard an invoice as valid and undisputed; and

(c) that any subcontract awarded by the contractor contains suitable provisions to impose, as between the parties to the subcontract—

(i) requirements to the same effect as those which sub-paragraphs (a) and (b) require to be imposed as between the parties to the public contract; and

(ii) a requirement for the subcontractor to include in any subcontract which it in turn awards suitable provisions to impose, as between the parties to that subcontract, requirements to the same effect as those required by this sub-paragraph (c).

 

Regulation 113(6)

(6) To the extent that a public contract does not contain express provisions dealing with any of the matters which, in accordance with paragraph (2), should have been contained in that contract, it shall be an implied term of the contract that—

(a) any payment due under it from the contracting authority to the contractor is to be made no later than the end of a period of 30 days from the date on which the contracting authority completes any process of verification that the invoice is valid and undisputed;

(b) the contracting authority is to consider and verify any invoice submitted by the contractor in a timely manner with a view to ascertaining whether the invoice is valid and undisputed; and

(c) the contractor will include in any subcontract which it awards provisions—

(i) imposing, as between the parties to that subcontract, requirements to the same effect as those which sub-paragraphs (a) and (b) refer to as between the parties to the public contract, and

(ii) requiring the subcontractor party to that subcontract to include in any subcontract which it in turn awards provisions imposing, as between the parties to that subcontract, requirements to the same effect as those referred to in paragraphs (i) and (ii) of this sub-paragraph.