A public procurement ombudsman role should be created to police poor practice, according to the Specialist Engineering Contractors’ Group.
The recommendation is among a raft of proposals from the group, which represents engineering specialists in construction, in a report outlining payment practices and pre-qualification in public sector construction.
More than a third of respondents to a survey said they did not pay contractors within 30 days, and while the remainder said they did, this did not necessarily apply across the supply chain, the report said.
Almost two thirds of respondents took no measures to ensure supply chain payment protection. Only a quarter of English respondents monitored supply chain payments, compared to 70 per cent in Scotland and 56 per cent in Wales.
SEC recommended firms which failed to pay their supply chain within 30 days should be excluded from public sector work for a defined period. In public sector construction contracts, there should be greater clarity of the start date of the 30-day payment period, it suggested.
The organisation also found generally, public bodies did not use the standard pre-qualification questionnaire, PAS 91, without adapting or adding to it.
The report added it was “disappointing” that cash retention was widespread, especially as it was no longer required in standard contract forms. Sub-contract retentions are often released more than two or three years after sub-contract practical completion, it noted.
More than £1 billion of cash retentions remain outstanding in the public sector at any one time, according to SEC, mainly from construction supply chains and mostly small businesses.
“Consequently most authorities are borrowing, free of charge, cash from firms in the industry which generally do not have easy or inexpensive access to finance,” the report says.
SEC concludes half of authorities are not pro-active in improving payment performance. “Authorities which have indicated that they are not taking any action should be invited to justify their stance,” it concluded.