Date lodged: 17 January 2018
To ask the Scottish Government, further to the answer to question S5T-00865 by Keith Brown on 16 January 2018 (Official Report, c. 3), in light of the collapse of Carillion, what steps it is taking to assess the financial health of its other private contractors.
Answered by: Keith Brown 31 January 2018
Public bodies may select suppliers to be invited to bid based upon a number of criteria. One such criterion is that public bodies may set requirements relating to economic and financial standing designed to determine if the potential bidder has the necessary economic and financial capacity to perform the contract. Decisions as to the precise nature of these requirements are taken on a contract-by-contract basis and are proportionate to the value and complexity of the contract or framework. Where it is felt that further reassurance is required the Scottish Government may ask for contractors to provide Parent Company Guarantees to help alleviate potential financial risks.
As part of on-going Contract Management of all its major contracts, the Scottish Government monitors the financial health of its contractors, with the amount of scrutiny being related to the risk profile of the particular supplier and/or contract.
If something warrants further investigation, the Scottish Government works with Contractors to fully understand the issue and ensure continuity of public service provision.
In respect of Non-Profit Distribution Programme (NPD) and hub programmes, the tender processes for both programmes included an assessment of the financial standing of contracting entities at the time of tendering and entering into the contract, including a review of their debt positions. During the operational phases, procuring authorities who hold contracts with private sector partners are responsible for putting in place appropriate procedures to monitor contracts on an on-going basis.