More needs to done to improve supply chain payments in Scottish public sector contracts according to the Specialist Engineering Contractors’ (SEC) Group.
In April 2016 contracting authorities in Scotland with large annual procurement budgets became statutorily bound to declare (in their procurement strategies) how they intended to ensure 30 day payments along their supply chains.
In the first of its kind the SEC Group Scotland has surveyed contracting authorities (other than local authorities) to establish the extent of compliance with this requirement. Responses were received from 29 contracting authorities. The key findings were as follows:
- 13 (45%) authorities were not considered to be compliant;
- on the evidence provided it wasn’t absolutely clear whether 4 (14%) authorities were compliant;
- 3 (10%) authorities were taking steps to comply;
- 9 authorities (31%) were considered to be compliant.
The primary reasons for non-compliance – according to SEC Group Scotland – were as follows:
- lack of evidence demonstrating that 30 day payments were required in tiers 2 and tier 3 contracts (i.e. sub-contracts and sub-sub-contracts);
- no indication of measures such as performance monitoring to ensure compliance along the supply chain;
- failure to accurately reflect the requirement in the legislation – [section 15 (5)(d), Procurement Reform (Scotland) Act 2014] – that the 30 days commences from presentation of invoice or similar claim.
Commenting on the findings Eddie Myles, SEC Group Scotland’s chairman, said that it was still “early days” but contracting authorities’ required clearer guidance on what they needed to do to ensure compliance.
Mr Myles said: “Anecdotal evidence from SMEs in our sector suggests that little has changed. The easiest way to ensure compliance in many cases is to use project bank accounts as suggested in the statutory guidance accompanying the legislation.”
SEC Group has incorporated the survey results in a report to the Cabinet Secretary for Finance and the Constitution and the Minister for Business, Innovation and Energy. The report has a number of recommendations including the appointment of a “Construction Regulator” to oversee compliance and promote best practice in public sector procurement.