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Thu September 20 2018

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Huge support for Network Rail contract reforms

25 Jun Network Rail’s plans for new contract terms to protect subcontractors, announced last week, have been generating more rave reviews from across the industry.

Railway subcontractors will be paid more promptly
Railway subcontractors will be paid more promptly

The Specialist Engineering Contractors’ (SEC) Group, the Building Engineering Services Association (BESA), the electrical contractors’ association (ECA) and the National Federation of Builders have all put out statements warmly supporting the new measures.

Last week Network Rail announced that contracts in the upcoming Control Period 6 (CP6) would oblige main contractors to pay suppliers within 28 days and not withhold retention monies from them. Project bank accounts are also being introduced for some major rail projects. [See our previous report here.]

The SEC Group chief executive Rudi Klein said: “It is great to see large and influential public sector clients like Network Rail supporting best practice. We hope that others will follow, as there is still widespread payment abuse for SMEs in the construction and infrastructure supply chain. It will be a great lost opportunity if we do not all learn from Carillion’s failings.

“We particularly welcome Network Rail’s new monitoring processes and we would like to see their stand on retentions followed throughout their supply chain. Public sector procurement has a key part to play in reforming this outdated practice.”

BESA and ECA also said that Network Rail had “set a great example on fair payment, which others should now follow”.

ECA chief executive Steve Bratt said: “I am delighted to see such a positive development in the fight against unfair payment practices. Network Rail’s decision should signal to the wider industry that true change can, and must, happen. We urge as many clients as possible to follow suit, and show support for immediate reform.”

He added: “Network Rail will hopefully be the first of many clients to take bold steps towards fairer business practices and start to show that lessons have been learned from Carillion.”

BESA’s public affairs manager Alexi Ozioro said: “Network Rail has shown exemplary leadership and foresight. This demonstrates not only that reform can happen, but can happen very quickly. If a major client like Network Rail can do it, so can everyone.”

National Federation of Builders chief executive Richard Beresford said: “Certainty of payment creates a truly healthy supply chain. Network Rail has answered the question on how quickly can a major supplier change its payment policy. The only question that remains is: who will be the next major contractor to act on fair payment?”

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