ODA and Department of Health fail to enforce 30-day payment rule in Construction Commitments
The future of a government plan to improve payment standards in construction has been thrown into doubt as it emerged that three of the biggest public sector clients – including the Olympic Delivery Authority – are not enforcing it.
The government’s Construction Commitments, published by the Strategic Forum in June and hailed as the successor to the Egan report, say departments should work only with contractors that pay their suppliers within 30 days.
All the biggest government clients signed up to the standards, which were originally written for the Olympics.
However, it has emerged that Carillon’s contract to build the 2012 media centre, awarded two weeks ago, does not say when it must pay suppliers, despite its use of a 65-day payment period on some contracts.
The Department for Health and the Highways Agency confirmed this week that they would not exclude companies that did not meet the standards from bidding.
And in an apparent u-turn, the Office of Government Commerce, which oversees public sector procurement, said payment policy would “feature” in selection criteria but would not be grounds for excluding bidders.
It has no impact on our policy; our payment terms remain the same
Meanwhile Carillion, which gets about two-thirds of its work from the public sector, said it had “no plans” to change its policy, fuelling concern that the charter is a sham. Carillion said: “It has no impact on our policy which means, in principle, our payment terms remain the same.”
The Department of Health said: “There will be companies that do not comply with these timescales. Other than to encourage them to meet these time periods, we have no authority to enforce them.”
The Highways Agency said it required companies to operate payment days of 30 days or less, but understood contractors would need time to “modify their business systems”.
The ODA said: “It’s early days in the appointment of Carillion. The ODA has a role in approving the appointment of subcontractors and this will be discussed when we get to that point."
Rudi Klein, the chief executive of the Specialist Engineering Contractors Group, said: “Government clients should set an example. If you don’t apply the commitments, you shouldn’t get the cash.”