Fast Track for Extra COVID-19 Payments

The Cabinet Office have published model contract variations for JCT and NEC contracts, paving the way for public sector clients to support contractors on projects placed in care and maintenance or which have been suspended altogether.

These new contract variations will support the Government’s procurement policy note 02/20. In the note, it orders public clients to settle construction bills straight away, and to still pay for work even if sites are suspended. This emergency guidance will last until at least June 30^th, 2020.

Contract variations cover four main options for supporting contractors’ cashflow during the Coronavirus outbreak. In order to further east the cashflow, chiefs at the Cabinet Office have also given the all clear for contracting authorities to consider the release of retentions where the works have been completed in substance, and only minor defects remain.

To ease payment down the supply chain, contracting authorities have also been advised to consider operating projects bank accounts during the COVID-19 period.

Four payment mechanism contract variations

• Accelerated payment of invoices
• Certification of interim valuations where work has not been undertaken, based on previous valuations
• Amendments to existing payment mechanism to make more regular payments or reorder existing payment schedule
• Provision of advance payment(s) to the supplier

The latest update to the Government procurement note also highlights that contractors can’t be paid twice, by way of extra payment and claim for some or all of the same employees working on the contract under the Coronavirus Job Retention Scheme (CJRS).

Under the CRJS, payments are for staff who are currently furloughed and not working. It also warns that any suppliers who are found to be acting fraudulently by claiming under the CRJS (or any other COVID-19 support schemes) for workers who are being paid under a public sector contract, could be excluded from any future public contract.

The Cabinet Office also gives the all-clear for contracting authorities to consider the release of retentions where the works have been completed in substance and only minor defects remain.

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