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Poor payers face exclusion from public contracts

12 April 2018 | By Neil Gerrard

The government is committed to levelling the playing field for smaller suppliers (Image: Dreamstime)

The government has revealed plans to exclude poor payers from public contracts.

Cabinet Office minister Oliver Dowden is due to announce proposals today that will mean suppliers on major government procurements are excluded if they can’t demonstrate “fair and effective payment practices” with their subcontractors.

The government also plans to give subcontractors greater access to buying authorities to report poor pay performance.

And suppliers will have to advertise subcontracting opportunities via the Contracts Finder website, as well as provide the government with data showing how businesses in their supply chain, including small businesses, are benefiting from supplying to central government.

The new rules apply to all new procurements worth above £5m a year, starting from 1 May this year. 

Suppliers will be required to advertise subcontracts on Contracts Finder above a minimum threshold of £25,000.

“We have set a challenging aspiration that 33% of procurement spend should be with small businesses by 2022 – and are doing more than ever to break down barriers for smaller firms.”

Oliver Dowden

Meanwhile, prime minister Theresa May has written to the Cabinet to nominate a small business champion minister in each department to ensure that small- and medium-sized enterprises (SMEs) are given a fair opportunity.

Oliver Dowden, minister for implementation, said: “This government is listening to the business community and is committed to levelling the playing field for smaller suppliers to win work in the public sector.

“We have set a challenging aspiration that 33% of procurement spend should be with small businesses by 2022 – and are doing more than ever to break down barriers for smaller firms.

“Small businesses are the backbone of the UK economy, and play a key role in helping us to build a strong, viable private sector that delivers value for taxpayers and jobs for millions all over the UK.”

Federation of Small Businesses national chairman, Mike Cherry, said: “As such a large and prominent customer in the economy, the government has a pivotal role to play in demonstrating what it is to be a good client.

“It is right then that the government today announces, as part of a new package to boost SME procurement, that it will clamp down on poor payment practice throughout public procurement supply chains.”

The government’s announcement came a day after Peter Aldous MP and a delegation of construction industry leaders delivered a petition on fair payment and retentions to Theresa May at 10 Downing Street.

The Building Engineering Services Association (BESA) and the Electrical Contractors’ Association (ECA), which coordinated the petition, urged the industry to support it ahead of Friday 27 April’s second reading of the “Aldous Bill”, which proposes cash retentions owed to suppliers are held in trust accounts.

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