Government forces all public contracts to ensure suppliers are paid in 30 days

The reforms, first recommended by government advisor Lord Young in 2013, are the latest efforts by the government to deal with the problem of late payment and its impact on small companies.

These changes are also great news for small suppliers further down the supply chain as  all contracts awarded by central and local government are also required to contain a condition requiring their own contractors to include similar provisions in their own contracts.

Pre-qualification questionnaires, often a barrier to SMEs securing public sector contracts, will also be removed in any procurement where the value is below the EU threshold for goods and services; currently £111,676 in central government and £172,514 outside central government.

There is also further good news for SMEs as contracting authorities above certain thresholds are now required to advertise them publicly on the governments new Contracts Finder website.

Speaking about the changes Lord Young, said that the arduous “pre-qualification questionnaire (PQQ) being shelved will dramatically reduce the red tape involved in tendering for public sector contracts. PQQs have been found to be onerous by small businesses, often imposing more than 40 pages of questions before they can be considered for bidding for a contract.”

For contracts that are more complex, and worth more than the EU threshold, PQQs will be standardised, simplifying the application process. Under the previous system, small businesses were “at a distinct disadvantage”, lacking the resources available to larger firms, said Lord Young.

Image: Contract by Shutterstock