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Tue May 18 2021

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Scottish prompt payment rules are not working yet

5 Sep 17 Construction subcontractors in Scotland are calling for the creation of a Construction Regulator to act as an ombudsman for late payment disputes.

The Specialist Engineering Contractors’ (SEC) Group Scotland has conducted a survey of compliance among public sector bodies with new laws on prompt payment. It found that 45% were failing to comply.

In April 2016 contracting authorities in Scotland with large 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.  Responses were received from 29 contracting authorities and 13 were found to be non-compliant. These were:

  • Robert Gordon University
  • Royal Conservatoire of Scotland
  • Orkney NHS Board
  • Dumfries and Galloway NHS
  • Queen Margaret University
  • NHS Highland
  • NHS Greater Glasgow & Clyde
  • University of Aberdeen
  • Police Scotland
  • University of Stirling
  • NHS Forth Valley
  • Heriot Watt University
  • NHS Tayside.

For four clients, it was not possible to tell on the basis of information received:

  • University of the West of Scotland
  • Glasgow Caledonian University
  • Glasgow School of Art
  • University of Dundee.

The SEC found that nine contracting authorities are generally compliant:

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  • NHS Fife
  • Western Isles NHS Board
  • Edinburgh Napier University
  • University of Strathclyde
  • University of Edinburgh
  • NHS Borders
  • Scottish Fire & Rescue Service
  • Disclosure Scotland
  • University of Glasgow.

There were three contracting authorities which, although not currently complaint, are taking positive steps to comply:

  • Ayrshire & Arran NHS
  • NHS Scotland
  • University of St Andrews.

The primary reasons for non-compliance, according to SEC Group Scotland, were:

  • 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.

Eddie Myles, SEC Group Scotland’s chairman, said that contracting authorities required clearer guidance on what they needed to do to ensure compliance.  “Anecdotal evidence from SMEs in our sector suggests that little has changed,” he said. “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 Scottish government ministers.  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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