Guidance

PPN 021: Payment Spot Checks in Public Sub-Contracts (HTML)

Published 24 April 2025

Action note: 021

Issued: April 2025

Issue

1. Being paid promptly for work done is critical for business cash flow and the  government is committed to tackling late payment to businesses. Prompt payment ensures liquidity spreads throughout the economy, helps more small businesses within public procurement, and improves the resilience of public supply chains.

2. Section 73(1) of the Procurement Act 2023 implies 30-day payment terms into every public sub-contract^{[footnote 1]}. This Procurement Policy Note (PPN) outlines how contracting authorities can use spot checks to ensure that 30-day payment terms are being implemented throughout the supply chain in public sub-contracts.

Dissemination and scope

3. This PPN applies to all central government departments, their executive agencies and non-departmental public bodies. Such bodies are referred to as ‘in-scope organisations’.

4. This PPN applies to all sub-contracts substantially for the purpose of performing (or contributing to the performance of) all or any part of a public contract for goods and/or services and/or works, other than a special regime contract with a value of more than £5 million per annum (including VAT).

5. This PPN does not apply to concession contracts, utilities contracts awarded by a private utility, or contracts awarded by a school.

6. Other public sector contracting authorities may use this guidance to carry out spot checks to ensure that 30-day payment terms are being implemented throughout their supply chain in public sub-contracts.

7. Please circulate this PPN within your organisation, particularly to those in a commercial, procurement, and/or contract management role.

Timing

8. In-scope organisations should apply the provisions of this PPN  from 1 October 2025.

Action

9. In-scope organisations should include a model contractual term in new in-scope contracts, advertised from 1 October 2025, to enable them to conduct spot checks to assess and assure that suppliers comply with the payment terms detailed in section 73 of the  Procurement Act 2023.

10. In-scope organisations should conduct spot checks on invoices at random to deter non-compliance with the terms set out in the Procurement Act 2023 (Section 73), but will be able to conduct targeted spot checks where an authority has assessed there to be an increased risk of poor performance. In-scope organisations should remind suppliers that they may be subject to these spot checks.

11. In-scope organisations should conduct spot checks within the supply chain subcontracts for contracts in scope of this PPN at least once every six months from the award date of the contract.

12. The Public Procurement Review Service will investigate when a specific complaint has been raised against a contracting authority, a primary supplier, or any other supplier within the supply chain.  Suppliers are encouraged to report any complaints for late or unfair payments in public sector contracts by contacting: publicprocurementreview@cabinetoffice.gov.uk.

Guidance

13. The accompanying model contract wording provides guidance to support spot checks being carried out, as well as how in-scope organisations should conduct a spot check to ensure the correct payment terms are being included and adhered to by suppliers.

Background

14. The Procurement Act 2023 (Section 73) builds on and strengthens 30-day payment terms to be cascaded throughout the supply chain, by implying these terms into public sub-contracts even if not specifically included. It also ensures that payment must be made within 30 days of a valid and undisputed invoice being received, rather than within 30 days of being validated.

Contact

15. Enquiries about this PPN, and requests to receive the standard templates should be directed to the Crown Commercial Service Helpdesk (0345 410 2222, info@crowncommercial.gov.uk).

1. A public sub-contract means a contract substantially for the purpose of performing (or contributing to the performance of) all or any part of a public contract. ↩