Publishing compliance data on payment of invoices

Alex Kynoch, Browne Jacobson

Crown Commercial Service has issued a Procurement Policy Note (03/16) on the publication of payment performance statistics (the Note) under the Public Contracts Regulations 2015 (PCR). The Note does not apply to contracts for healthcare services which are covered by the National Health Service Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 or to maintained schools and academies as these are exempt from the publication requirement.

Subject to the exceptions set out above, Regulation 113 of the PCR require contracting authorities to include terms requiring the payment of undisputed invoices within 30 days in all public contracts. If an authority fails to do so, a term is implied into relevant contracts by the PCR. This applies to payments from contracting authorities to contractors and from contractors to their subcontractors.

Regulation 113 also requires contracting authorities to publish statistics on the internet showing how far the contracting authority complied with this 30 day payment requirement in the previous financial year. In addition, contracting authorities must have regard to guidance issued by the Cabinet Office (this guidance would include the Note).

The information to be published must, by virtue of PCR 113, includes:

  1. the proportion of invoices that were paid in accordance with those obligations, expressed as a percentage of the total number of invoices that were, or should have been, paid in accordance with those obligations
  2. the total amount of any liability (whether statutory or otherwise) to pay interest which accrued by virtue of circumstances amounting to a breach of those obligations
  3. the total amount of interest actually paid in discharge of any such liability (including any which had accrued before the beginning of the period to which the statistics relate).

Regulation 122 confirms that the publication requirements are slightly different for the year ending 31 March 2016, and this is explained further in the Note:

  • After March 2016, all in-scope organisations must publish, on an annual basis and covering the previous 12 months, (i) the percentage of their invoices paid within 30-days and ii) the amount of interest paid to suppliers due to late payment.
  • After March 2017, all in-scope organisations must publish, on an annual basis and covering the previous 12 months, (i) the percentage of their invoices paid within 30 days ii) the amount of interest paid to suppliers due to late payment and iii) the total amount of interest that the contracting authority was liable to pay (whether or not paid and whether under any statutory or other requirement), due to a breach of Regulation 113.

The Note does not set out a format for the publication of the information but suggests that best practice would be to maintain previous years’ information online to enable a comparison between different years.

Any contracting authorities which have not yet published the statistics set out above should do so as soon as possible. The Cabinet Office Mystery Shopper service will be monitoring compliance with this requirement (and presumably naming and shaming non-compliant authorities) so the primary risk is reputational. It is difficult to foresee how a breach of this requirement could lead to a claim under the PCR – perhaps a contractor might claim that they would have bid differently had they known that the contracting authority regularly failed to pay invoices within 30 days but this would be difficult to demonstrate in practice.