Retention battle is not over yet

The Committee's second report on retentions states: "We did not find the Government's response to our [first] report entirely satisfactory. It seemed to us that, while the Government was content to accept any conclusion or recommendation directed at third parties, it did not accept any which would require it to take specific action itself."

The Committee has urged the Government to abolish retentions entirely. It will also be monitoring the Government's progress towards meeting its own target of 2005 for defect-free construction and the impact it has on the use of retentions.

Rudi Klein, chief executive of the SEC Group, said: "The Government was always putting off phasing out retentions until it had seen the impact of its own procurement changes. This was an excuse for doing nothing, as the committee acknowledged. I'm now confident that we will have got rid of retentions in government contracts by 2007."

A SEC Group report on local authorities' construction procurement has uncovered that the vast majority still award work to the lowest priced contractor.

Some 88% of SEC Group firms say lowest price is the only criterion when working for local authorities, while 60% indicated that quality had not been a deciding factor.

On a brighter note, 67% of firms reported experiencing no payment difficulties with regards to local authority work.