Recent volatility in the stock market shows that the economic recovery remains fragile and subject to shocks. This makes ongoing efforts to improve the way projects are procured, tenders are handled and contractors are paid more urgent than ever.
It is in the wake of a recession that contractors are at their most vulnerable, as strangled cash flow can put them at greater risk if they have taken on additional work and, with it, extra costs.
That is why B&ES and its umbrella body the Specialist Engineering Contractors’ (SEC) Group have been playing a hands-on role in the development of the Scottish Procurement Reform Bill, which received Royal Assent in June and sets a precedent for the whole of the UK.
New First Minister and leader of the Scottish National Party Nicola Sturgeon has taken a personal interest in this issue, and there is a strong wave of political will behind attempts to reform and modernise the way contracts are procured and how the supply chain is rewarded in Scotland.
The SEC Group is pushing hard for the introduction of an ombudsman as part of the bill to ensure that any new laws on procurement are properly enforced. It is a common complaint that regulation is often not followed up with enforcement and, therefore, well-intentioned legislation aimed at protecting vulnerable contractors from red tape and payment abuse is ignored.
Nigel Don MSP has taken up this fight on behalf of the industry in Scotland, arguing at the Holyrood parliament that unless there is some form of enforcement, small and medium-sized businesses will remain reluctant to challenge contracting authorities that ignore statutory requirements out of fear of being “blacklisted” from future work.
The final plank of successful legislation is an independent “champion” who protects small firms from payment abuse and unfair tendering practices without compromising their ability to win further work.
Ms Sturgeon said there had been discussions at a high level about how the government could address these issues.
Scotland is also leading the way in the adoption of project bank accounts, particularly in healthcare, education and transport projects. These provide payment security to supply chain members and reduce the risk of company insolvencies that can derail projects.
Reform of procurement and payment practices has long been a necessity – arguably since the first report into low-cost tendering and aggressive payment practices was commissioned just after the Second World War.
However, the current surge of growth across the construction sector means that this issue is once again coming to a head and reform is an absolute priority for the whole country – not just
Bob Dyer is secretary at SEC Group Scotland and national executive officer at B&ES Scotland