SPECIALIST Engineering Contractors’ (SEC) Group has welcomed moves by Network Rail to mandate 28-day payments to their supply chain partners and the introduction of Project Bank Accounts (PBAs).
SEC Group also said it was “encouraging” to see Network Rail take the next steps in banning cash retentions and developing a “closer and more collaborative” relationship with suppliers and subcontractors.
Network Rail has announced thousands of UK SMEs will benefit from revised contract terms, aimed at creating a healthier environment for suppliers.
Professor Rudi Klein, SEC Group CEO said, “It is great to see large and influential public sector clients like Network Rail supporting best practice. We hope that others will follow, as there is still widespread payment abuse for SMEs in the construction and infrastructure supply chain. It will be a great lost opportunity if we do not all learn from Carillion’s failings.
“We particularly welcome Network Rail’s new monitoring processes and we would like to see their stand on retentions followed throughout their supply chain. Public sector procurement has a key part to play in reforming this outdated practice. However, until everyone abolishes retentions, we need urgently now an intervention like the Aldous Bill, to ensure that if retentions are deducted, they are protected and SMEs do not lose their cash.”
Stephen Blakey, commercial director at Network Rail said, “The Fair Payment Charter was about recognising that cash flow is the ‘life blood’ for every supplier by committing to pay for goods and services in a fair, predictable and timely way. Harnessing the support we have already received from our major suppliers, we have simply taken the next natural step and formalised that approach for CP6. Culturally, it sends a huge signal as to the value we place on a sustainable supply chain and the way we want to do business.
“We recognise the challenges faced by smaller suppliers and are in a position to influence the way work on our railway is delivered and paid for. It is in our interest to have a sustainable supply chain at all levels – they are vital to the successful delivery of our projects and the safe operation of Britain’s railway.”
