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Thu March 21 2019

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Scotland slashes threshold for project bank accounts

20 Feb The threshold for the mandatory use of project bank accounts (PBAs) on Scottish public works contracts is to be cut from £4.1m to £2m from next month.

PBAs have been mandated for use by Scottish Government bodies since 31 October 2016.

As from 19 March 2019, public bodies must include a PBA in tender documents for public works contracts with an estimated value or more than or equal to £2m, or £5m for civil engineering projects). The changes should be applied to contracts called off from existing framework agreements where allowed by the terms of the agreement. Where their application is discretionary under such agreements it is strongly encouraged where practicable.

The decision has been praised by the Specialist Engineering Contractors’ (SEC) Group Scotland. National executive officer Alan Wilson said: “We have been pressing Scottish Government for some time to reduce the threshold to £2 million.  Clearly Scottish Government has been listening and industry SMEs will be the prime beneficiaries of this lowering of the threshold.”

The Scottish Government said that the changes deliver upon its commitment to increase the number of subcontractors able to access PBAs.

Two earlier provisions for not deploying a PBA in the certain circumstances have been removed. These covered where the main contractor undertakes to self-deliver a significant amount of the contract and where the PBA is unable to be opened for the early stages of a project on site.

Original PBA application thresholds and non-deployment provisions introduced in 2016 stand until 18 March 2019. The changes do not apply to existing contracts or to procurement procedures underway by then.

MPU

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