The Scottish Minister for Local Government, Housing and Planning Kevin Stewart MSP, has responded to a letter from associations representing contractors and construction specialists in Scotland (including FIS) that has called for a temporary release of retentions held on public sector contractors in Scotland.
The Construction Industry Coronavirus (CICV) Forum which brings together 23 trade bodies and professional organisations has written to the Scottish Government to consider several proposals that are intended to improve financial viability in the sector.
This includes recommendations that Holyrood ensures that public sector procurers agree on final project costs as of 31st March 2020. The CICV Forum asserts in the letter that the ambition should be to resolve disputes and ensure payment within 14 days to allow vital cash to flow into the construction supply chain.
In his response Kevin Stewart MSP highlights the Construction Procurement Note (CPD 1/2020) recommends:
- Contracting authorities seek to agree with the contractor a process for identifying and recording prolongation and disruption directly attributable to COVID-19; to minimise the potential for doubt to arise in the interpretation of prevailing circumstances on site.
- Contractual disputes which had crystallised on projects before sites were closed should, unless the parties agree otherwise, adhere to the terms of escalation and resolution stated in the contract.
- We expect however that contracting authorities and contractors should utilise closures to take the time to reconsider and re-examine disputes and where possible inject renewed impetus into resolving such component parts that can be agreed in order to release cashflow into the supply chain.
- Provides specific guidance on payment to suppliers to ensure service continuity in the construction sector and suggests that contracting authorities consider releasing retentions promptly on a proportional basis to work done.
He also highlights that exceptional effort is being made in the public sector to pay invoices quickly not least by Scottish Government introducing a 10-day period. The expectation that such efforts to be replicated by all firms in the supply chain to pay subcontractors as much as they are due as quickly as possible.
Firms which are finding that this is not the case are encouraged to contact the Finishes and Interiors Sector so that any failing is fed in formally through the CICV.
Mr Steward goes on to discuss the potential to use project bank accounts on start-up projects “unless there are compelling reasons not to”, but reinforces that reducing the threshold to £250k would be unmanageable at the coalface and would stall vital projects.
On the Issue of Lower Productivity and compensation Mr Stewart states: “We expect honest, open and constructive engagement, recognising the mutual need of clients and contractors to pragmatically address issues relating to COVID-19. However we cannot assure beyond this that they will all reach the same conclusions and take the same action.”
You can read the full letter here Letter From Minister For LGHP To CICV Forum