Olympics Authority ditches retentions practice

The Olympic Delivery Authority (ODA) has confirmed that its policy is “not to deduct cash retentions on any of its contracts.”

The ODA statement verifies that contractual arrangements with Tier 1 contractors will allow monitoring of accounts and records to ensure that retentions are not being deducted along the supply chain.

In some cases, however, the ODA “reserves the right to require a retention bond to be put in place where this is justified on a project-specific basis.”

The Specialist Engineering Contractors’ (SEC) Group and the National Specialist Contractors’ Council (NSCC) have welcomed the confirmation statement.

Trevor Hursthouse, chairman of the SEC Group said: “The ODA’s retentions policy on Olympic projects will immediately benefit the cash flow of SMEs and make a significant contribution to the successful delivery of Olympic projects.”

Speaking on behalf of NSCC, past president Graham Wren said: “The outdated practice of deducting retentions has already been condemned as poor practice by a House of Commons Select Committee. I am delighted that the ODA has acknowledged this and will be monitoring compliance with its retentions policy along the supply chain.”

Where Tier 2 subcontractors employ Tier 3 sub-subcontractors, it is anticipated that subcontract provisions incorporating similar terms will be used.