Date lodged: 18 November 2016
To ask the Scottish Government what assessment it has made of late payments in publicly-funded subcontract chains and the impact of these.
Answered by: Derek Mackay 5 December 2016
The Scottish Government does not hold details of every contract awarded by every public body in Scotland. We have taken steps, however, to reduce the impact of late payment in public contracts. 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.
The Procurement Reform (Scotland) Act 2014 requires contracting authorities to set out how they intend to ensure that payments down the sub-contract chain are made within 30 days of a valid invoice being presented.
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.