The Specialist Engineering Contractors’ (SEC) Group prepared this short report based on a survey of Scottish contracting authorities (other than local authorities) using the Freedom of Information (Scotland) Act 2002.
The survey was directed at establishing the extent of compliance with section 15 (5)(d) of the Procurement Reform (Scotland) Act 2017. This provision requires contracting authorities to set out in their procurement strategies (where they are bound to publish a procurement strategy) how they intend to ensure 30 day payments to sub-contractors in the supply chain.
The statutory guidance accompanying this Act (the relevant extract is at Annex 2) advises on the measures to be undertaken. Four measures are envisaged:
- 30 day payment clauses to flow into tiers 2 and 3 contracts;
- The contracting authority to reserve a right to obtain information on supply chain payment performance;
- A procedure for rectifying prompt payment issues; and
- A monitoring process.
The key findings from this SEC Group Scotland survey are 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 the report– are 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.
The survey was conducted over May/June 2017. There were 29 respondents, mainly universities and NHS bodies, but also including Police Scotland and the Scottish Fire and Rescue Service.
SEC Group has incorporated the survey results in this 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.
If you would like to read the full report, please follow the link below: