Originally written by Timothy Adler on Small Business
Whitehall has repeatedly flunked its own test for dropping large government outsourcers who fail to pay small business subcontractors on time.
Under plans coming into force in September, outsourcers which fail to pay 95pc of subcontractors within 60 days risk being frozen out of public-sector procurement, which is worth £60bn a year. The rules will apply to all Government contracts worth more than £5m. As of now, four-fifths of Government outsources would be excluded from bidding on contracts.
However, according to research by Tussell, a data provider on UK government expenditure, Whitehall has rewarded large outsourcers over 200 contracts, despite them have already failed the 95pc threshold. The combined contracts were worth £90bn.
The Ministry of Defence has been the worst culprit; out of 154 contracts worth more than £5m awarded since 2015, 60 have gone to suppliers which did not meet the 95pc threshold.
The Department for Transport also had a poor record: it gave big contracts to 36 suppliers which did not meet the threshold, from a total of 75.
The Department for Work and Pensions has awarded 25 contracts to late-paying large outsourcers since 2015.
Late payments force 50,000 small businesses to shut every year.
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Late payers to small business could be barred from public sector contracts
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Some of the biggest Government contractors face being barred from public sector contracts if they fail to start paying small businesses on time.
From September, outsourcers which do not pay 95pc of small business subcontractors within 90 days could be frozen out of public sector procurement, according to Cabinet Office plans. The rule would apply to all contracts worth more than £5m in the £50bn Government procurement sector.
Outsourcers including Kier, Balfour Beatty, Mitie and Capita have fallen below the 95pc threshold, according six-monthly data collected by the business department, and would be excluded from bidding for new contracts.
Percentage of suppliers paid within 60 days%
Kier82%
Balfour Beatty82%
Mitie88%
Interserve90%
Capita90%
Serco96%
G4S100%
Source: company reporting
Last week, the Government announced that large companies which pay small businesses late could be fined under new powers given to the Small Business Commissioner. But professional associations and payment platforms say the Government late-payments crackdown does not go far enough. All large companies should be forced to pay small business suppliers within 30 days, they say.
“We expect [all companies] to meet the 60-day target and, if they don’t, they may not be considered for public sector contracts,” small business crown representative Martin Traynor told the Sunday Times.
Traynor
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The post How small businesses can expand into the public sector appeared first on Small Business.
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The post Research shows SMEs struggle without a procurement function appeared first on Small Business.
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