MPs call for contractors to pay ‘subbies’ on time

A powerful committee of MPs has called for local authorities to get better value from the £45 billion they spend each year on procuring goods and services.

In a report published on 13 March, the Communities and Local Government Committee, members made a string of recommendations, including calling for a requirement in contracts that contractors ensure subcontractors are paid promptly, right down the supply chain.

The report said: “Local authorities should take into account any failure by a contractor to comply with the conditions when assessing tenders for any future work.”

Other recommendations include reducing red tape burdens on businesses by establishing “a proportionate approach” to meet EU requirements and streamline approaches. Paperwork should also be standardised, particularly pre-qualification questionnaires.

The MPs said in their report: “The cost to companies wishing to bid for council business can be an eye-watering £50,000 per tender – higher than in most other EU countries. Councils must become more confident in how procurement guidelines can be followed without imposing excessive burdens on businesses.”

They also called urged councils not to “let and forget” contracts but should pro-actively tackle fraud throughout the lifetime of a contract, not just at the tender stage.

The report said that councils and the Local Government Association must invest to ensure procurement skills were embedded across councils.

Committee chair Clive Betts said: “We need investment now so that staff right across councils gain the skills needed for effective procurement. At times staff, unsure of the needs of local residents and business – especially small local businesses – fall back on wasteful bureaucracy. This has to stop.”

The MPs’ recommendations have particular significance for the construction sector. According to the Federation of Master Builders, public sector construction contracts are worth more than £37 billion per year.

When the committee was taking evidence, the CBI cited the example of a construction company that spent about £1.6 million on pre-qualification in a year while the Specialist Engineering Contractors’ Group said its members spent over 60,000 days a year filling questionnaires and duplication in the process in England and Wales cost them £20 million a year.

Palmers Solicitors, we can provide comprehensive advice and guidance to construction companies on all aspects of construction law, including advising on and drafting contracts and other agreements that can help disputes arising at a later stage.

For more information about our specialist construction work, please contact Adam Davis at adavis@palmerslaw.co.uk.