Only a third of public sector contracting authorities comply to supply chain payment requirements

SEC Group ScotlandThe umbrella body for Scotland’s engineering sector has urged the public sector to do more to improve supply chain payments after a survey revealed that almost half of the country’s contracting authorities were not considered to be compliant with their statutory payments requirements.

On April 18 last year, 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 Specialist Engineering Contractors’ (SEC) Group Scotland has surveyed contracting authorities (other than local authorities) to establish the extent of compliance with this requirement.

From a total of 29 responses it was found that only 9 of the contracting authorities (31%) were considered to be compliant with 13 (45%) considered to be not compliant.

On the evidence provided it wasn’t absolutely clear whether 4 (14%) authorities were compliant, while 3 (10%) authorities were taking steps to comply.

According to SEC Group Scotland, the primary reasons for non-compliance were a 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) and a lack of indication of measures such as performance monitoring to ensure compliance along the supply chain.

There was also failure to accurately reflect the requirement in the legislation – – 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.

He added: “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.

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