Cabinet Office Minister Oliver Dowden has announced proposals to exclude suppliers from major government procurements if they cannot demonstrate fair and effective payment practices with their subcontractors. Other plans include allowing subcontractors to have greater access to buying authorities to report poor payment performance, signalling the government’s commitment to improving payment practice in the UK.
Further requirements mean suppliers will have to advertise subcontracting opportunities via the Contracts Finder website, and to provide the government with data showing how businesses in their supply chain, including small businesses, are benefiting from supplying to central government.
David Frise, chief executive at FIS, said: “The FIS welcomes this latest government announcement on actions to deter poor payment practices on government contracts. If this initiative can be made to work it will be a further clear signal that the collapse of Carillion has triggered a change in attitude at all levels. We would urge the government to support the Private Members’ Bill currently due a second reading in the House of Commons that will protect cash retentions.”
The Specialist Engineering Contractors’ (SEC) Group chief executive, Professor Rudi Klein, said that he was particularly pleased that the government intends to exclude poor payers from government procurement: “We have been urging the Government to introduce a yellow/red card system for a long time. The yellow card is a warning to improve payment performance and the red card excludes a continuing poor performer from bidding for government contracts for a period of 2 to 3 years.”
Professor Klein added that if such a system had already been in place Carillion would have been excluded from government contracts. However, SEC Group believes that on payment security the government needs to go further and legislate to require that project bank accounts are put in place for all public sector projects, and also give its support to the Aldous Bill that will protect cash retentions.