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Changes to government procurement announced by Greg Clark

23 March 2018

Improvement to procurement policies within public sector contracts were announced by business secretary Greg Clark this week.

This was confirmed during his participation within the ongoing inquiry into the collapse of Carillion, as Mr Clark was questioned by MPs.

Government procurement policies were highlighted as adding to the practice of sub-economic tendering by the PFM Editorial Advisory Board when it met shortly after the Carillion collapse.

A particularly relevant question was asked by Conservative MP Antoinette Sandbach, when she questioned how suppliers could have confidence in the Prompt Payment Code (PPC) run by the Department for Business, Energy and Industrial Strategy (BEIS).

Ms Sandbach said that Carillion had been a member of the scheme, but had subjected its suppliers to 120-day payment terms and it was likely it had been "propped up by those terms", according to Construction Manager Magazine.

Stating that it had been "obvious" that Carillion's terms had been too long, Mr Clark said that companies were now obliged to report on their payment policies and practices, which had not previously been the case.

The "arresting effect" this had begun to have on issues such as gender pay was used as an example of how the situation was expected to improve.

Mr Clark further stated that he agreed "it is not adequate" and outlined discussions conducted with SMEs "in our taskforce in recent weeks" to consider further improvements.

Labour MP Rachel Reeves described Carillion as "notorious" late payers and asked how government procurement was being improved "to make sure where the money actually goes", in addition to "tightening up" the PPC.

Agreeing that government practise "has not been good enough" Mr Clark said it should use its influence "for good" wherever possible.

However, he declined to commit to any timescale despite describing the action as "a priority and it needs to be urgent".

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