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Government reveals new subcontracting rules

Procurement jpg

Contractors will have to advertise all subcontract opportunities worth more than £25,000 under new measures due to come into force next month designed to encourage smaller businesses to bid for government work 

The rule, which will take effect on 1 May, will apply to opportunities on government jobs worth more than £5M a year. It comes after industry figures called for an overhaul of the procurement process following the collapse of major government supplier Carillion earlier this year. 

As well as advertising work on the Contract Finder website, organisations must also report how much they spend on subcontracting, and separately how much they spend directly with small to medium enterprises (SMEs) and voluntary, community and social enterprises (VCSEs), the new conditions dictate. 

Yesterday, the Cabinet Office announced that contractors unable to demonstrate “fair and effective” payment practices would be excluded from major government procurement processes and revealed plans to appoint a small business champion minister in each department.

The move comes in the wake of the Carillion’s compulsory liquidation in January. The Wolverhampton-headquartered company’s former directors were forced to deny accusations that it was a “notorious late payer” during a parliamentary inquiry hearing. 

Specialist Engineering Contractors Association Group chief executive Rudi Klein told New Civil Engineer that the proposals did not go far enough to protect the construction supply chain and advocated the introduction of project bank accounts and a reform of retention payment practices.

He said: “It is going very much in the right direction, but it is a shame that we have been talking about tightening this up for years now and we have to wait for a Carillion-type episode for it to happen, because everybody knew the situation beforehand.

“I think that given the background, while this is all good stuff, we now need to go further than what has been proposed.”




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