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Sun October 25 2020

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Government commits to 30-day payment terms for subcontractors

2 Nov 10 The Government is to make public sector contracts more accessible to small contractors, and improve suppliers' payment terms.

The Government is to make public sector contracts more accessible to small contractors, and improve suppliers' payment terms.

The strategy, launched by Business Secretary Vince Cable and Construction Minister Mark Prisk, aims to ensure the public sector meets its target of awarding 25% of all contracts to SMEs. 

There will be a single, standardised Pre-Qualification Questionnaire (PQQ) across all departments, which will be required to publish not only their procurement contracts but also how many of them are awarded to SMEs.

The Government is investigating using more ‘open frameworks' to tackle what is often regarded as a closed procurement system, awarding contracts to large companies – effectively excluding many small firms.

It is also committing to pay the majority of primary public sector contractors within five days and will ensure firms further along the supply chain are paid within 30 days.

Additionally, the former Trade and Industry Secretary Lord Young will carry out a report on how the Government can be more ‘small business and start-up friendly'.

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Phil Orford, chief executive of SME trade body the Forum for Private Business, welcomed the announcements.

"Following the spending cuts, it is important the Government addresses the key areas of public procurement and payment in order to achieve a real private-sector-led recovery with small businesses at its heart - which means business growth and job creation," he said.

"Providing sound policies on procurement, finance and enterprise follow - and more importantly are followed through - this will prove to be a welcome plan that, along with more work on tax and red tape, should help firms to flourish."

But the managing director of Midlands-based construction firm ABA Consulting, Alan Brough, was sceptical.

"We've recently applied for a contract relating to Stoke-on-Trent's regeneration, which is being managed by a publicly-funded body appointed by the Government,” he said. “We were chosen to be on the panel of shortlisted firms, but haven't had any work out of it at all, and then you hear that they're working with companies from London and elsewhere.

"There are all of these processes to go through, and I despair at it." 

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