Scottish Government pilots scheme to improve supply chain cash flow

Gurjit Degun
22 October 2013

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The Scottish Government is to trial a new system to improve cash flow in the supply chain to help small businesses.


Deputy first minister Nicola Sturgeon announced the move at the Scottish Government’s ninth National Public Procurement Conference in Glasgow yesterday.


Project Bank Accounts, a recommendation part of the review of procurement in construction – which was published yesterday- are ring-fenced bank accounts from which payments are made “directly and simultaneously” to members of the supply chain. The review said this removes any incentives to delay payment by main contractors.


“Late payment through the supply chain has been highlighted as a particular problem in construction,” Sturgeon told delegates. “Project Bank Accounts have the potential to significantly improve cash flow in the supply chain which is vital to so many small businesses.


“That early adoption paves the way to fuller implementation of other recommendations in the review.”


The Scottish Government is also set to introduce guidelines to enable purchasers to exclude constructions firm found to have blacklisted workers.


It means that any construction company found not to employ workers because they are part of a trade union will not be allowed to bid for public work.


Sturgeon said the guidelines will be statutory through the Procurement Reform Bill. “We are determined to send the clearest possible message to industry about the standards of behaviour that we expect from them,” Sturgeon told the conference.


“We have been discussing specific guidelines for purchasers. These guidelines, which we intend to publish very shortly, will enable purchasers to exclude from competition any company that has found to have blacklisted workers and which hasn’t yet put its house in order.


“We intend to place these guidelines on a statutory basis through the procurement reform bill and through amendments to existing Scottish procurement regulations. I hope that send a very strong message to industry.”


Sturgeon said the Scottish Government will also join other European and international governments in making a formal commitment in making sure there is greater transparency in procurement to tackle fraud and corruption.

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