Government not imposing construction payment terms

7 August 2008
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08 August 2008 | Helen Gilbert

Public sector buyers are failing to enforce a 30-day payment rule just weeks after signing up to a voluntary agreement to do so.

The Strategic Forum for Construction, a group of industry bodies including the Construction Industry Council and Construction Products Association, published the Construction Commitments standards in June. A number of government departments signed up to the accord which states they should only work with contractors that pay their suppliers within 30 days. But it has emerged the Department of Health (DH) and the Olympic Delivery Authority (ODA) are not excluding firms that do not meet the standards from bidding. A DH spokesman said the NHS usually stipulates a 30-day payment period within its Standard Financial Instructions but added: "No doubt there will be individual construction companies who do not comply with these timescales, other than to encourage those companies on our supply chains to meet these time periods, DH has no authority to enforce." An ODA spokesman said: "The ODA encourages all of its contractors to sign up to the Construction Commitments and has had a very positive response to date...We will discuss payment terms as we get to the stage of subcontractors being appointed, which the ODA has a role in." A spokesman for the Office of Government Commerce, an office of the Treasury established to help government deliver best value from its spending, said some departments were taking a robust stance with their suppliers on fair payment. Highlighting one example, he added: "The MoD [Ministry of Defence] has negotiated a reduction of one of their contractor's payment periods from 65 to 30 days."



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