Date lodged: 27 November 2017
To ask the Scottish Government what assessment it has made of payment times in publicly funded subcontract chains.
Answered by: Derek Mackay 6 December 2017
The Scottish Government does not hold details of every contract awarded by every public body in Scotland. We have taken a range of measures, however, to support prompt payment in public sector supply chains. In 2009, we introduced a standard clause into our contracts which requires valid invoices to be paid within 30 days of receipt at all stages of both the prime contract and sub-contract chain. We encourage other public bodies to adopt a similar clause.
We published guidance on the use of Project Bank Accounts (PBAs) in construction contracts in September 2016. PBAs ensure that payments for supply chain firms in both tiers immediately below the main contractor are made promptly and protected from upstream insolvency. Scottish Government bodies must include a PBA in tenders with an estimated value of at least £4.1m for building projects, or £10m for civil engineering projects. We encourage other public bodies to also use PBAs.
The Procurement Reform (Scotland) Act 2014 requires public bodies to set out in their procurement strategy how they intend to ensure that payments down the sub-contract chain are made within 30 days of a valid invoice being presented. Such bodies must also report annually against their procurement strategy, including how they have complied with their prompt payment policy. These reports will be published by the individual public bodies and will form the basis for an annual report on procurement activity in Scotland to be prepared by Scottish Ministers. Financial year 2017-18 will be the first full year subject to annual procurement reports under the Procurement Reform (Scotland) Act 2014.