Plans for suppliers to provide “incentive payments” to contractors to ensure a place on the supply chain have sparked fury, Building reported.
Evidence has emerged that Mace planned to introduce an “annual incentive” system requiring all specialists to pay a minimum fee to be retained as a supplier, as well as a further percentage fee dependent on the amount of work undertaken.
The revelation came as it also emerged that the Specialist Engineering Contractors (SEC) Group has written to paymaster general Francis Maude over Carillion’s behaviour towards suppliers.
Last year Maude called in contractor Serco “to explain itself” after it asked suppliers for money back following the renegotiation of Serco’s government contracts.
Carillion had been renegotiating existing contracts with suppliers for discounts of up to 20% and had told suppliers that they had to enter online auctions to get work.
Rudi Klein, chief executive of SEC Group, said: “We are seeing main contractors trying to demand money back with menaces. These are unpleasant threats.”
He said he had written to Maude over the issue and is awaiting a reply. He is aiming to get questions asked on the matter in the House of Commons.
Earlier this year Mace attempted to get suppliers to join a “trading alliance” under which “annual incentives” were required.
Building reported that documents show that according to the proposed plan “the trade partner agrees to pay Mace a minimum sum […] each trading year”. A further percentage fee would be due based on the amount of work done by the supplier, even if payments came direct from clients not via Mace. The pro-forma agreement says that the incentive fee is due even when the actual fee for the project is in dispute.
However, the “incentive” system was never implemented following angry feedback from suppliers.
A spokesperson for Mace said: “A proposal was submitted by one of our operations boards to establish trading agreements with a small number [of preferred suppliers] in 2010. A draft agreement was written. The board rejected this proposal and the matter was closed.”
