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OGC will name late payers to push good practice

Public sector clients will be able to compare the payment practices of construction companies for the first time under plans taking effect later this year.

Office of Government Commerce head of construction John Ioannou is to publish a database of projects that will allow “transparency about suppliers’ payment regimes”.

Mr Ioannou said: “It doesn’t take too much thinking to see where that might move - when a public sector client is looking to appoint suppliers, they will be able to use payment regimes as part of the assessment.

“We have to hold the industry to account - that means clients, contractors and subcontractors - and highlight who the good payers are.”

The database will cover work commissioned by central government departments through schemes such as the Building Schools for the Future frameworks and ProCure 21. The OGC’s remit was expanded to cover local government in April, so the database could be expanded.

Although the database will only be accessible by public sector clients, Mr Ioannou said the OGC was considering the implications of making the information more widely available.

A year after the introduction of its fair payment charter, the OGC is currently surveying the problem of late payment among clients and, via trade bodies, contractors and subcontractors. The results are due to be published at the end of April.

Mr Ioannou said there was already “robust evidence” that public clients were obeying the charter dictat of paying within 30 days although its does “get more anecdotal further down the supply chain”.

“If we look at where we were four or five years back it was dire. Now it is a variable picture but the charter has been there for just over a year and certainly forward-thinking clients are pushing it down their supply chain. The six-monthly reviews we do of government departments and the supply side give me some room for optimism.”

He said that subcontractors experiencing practices such as late payment, unjustified retentions or forced discounts should contact the OGC.

“If that is happening we want to know - we aren’t going to depend entirely on surveys. The OGC is minded to pursue this kind of behaviour, particularly in the current economic environment where cashflow is important.”

The issue of late payment has long been a concern of sub-contractors, who feel that larger players manufacture disputes to hold on to cash.

The latest National Specialist Contractors’ Council state of trade survey found that the percentage of specialist contractors waiting more than 60 days to be paid was growing, while those being paid between 30 and 60 days was falling.

The Civil Engineering Contractors Association said it applauded the OGC’s fair payment efforts, but added: “Nobody should get on a database supposedly as a late payer without due regard to the terms of the contract.”

If the OGC didn’t exercise caution the database could prove “damaging to people’s commercial interests” the agency said.

Rudi Klein, chief executive of the SEC group, welcomed the move, but added that the date should be “meaningful”.

He said: “What is a good payer? Somebody who takes 120 days to pay but always pays on time? Is a bad payer someone who is always late on their 30-day payment period?”