DE remains steadfast over prime contracts

Defence Estates (DE) remains determined to implement its controversial prime contracting model, which forces contractors to pay suppliers before seeing any money from the client.

Dr Barbara Young, who took over in May as the DE's deputy chief executive for innovation, quashed any hope of a change to this policy. Ensuring that suppliers are paid first is fair and is part of ensuring the DE is a best practice client, she told CJ.

Young said DE's prime contracting model will continue to be refined based on industry recommendations, but the issue of payment looks set to be a sticking point in upcoming talks with the Construction Confederation (CC).

Clare Edwards, legal affairs director at the CC, said this pay structure is tantamount to forcing contractors to finance DE projects, an arrangement which "will inevitably increase costs".

However, there has been some disagreement among contractors as to how to take discussions forward over their concerns with prime contracting. Oliver Whitehead, chief executive of Alfred McAlpine, said: "With 20 members in the Major Contractors Group it's not surprising that they are not all going to have the same view. It is disappointing we haven't made more progress and there are some issues I am uncomfortable with. But my personal view is that the supply side has got to try and help the MoD in its efforts to change.

"DE chief executive Ian Andrews is serious about trying to take the aggression and adversarial nature out of contracts. You've got to remember that the MoD has a lot of people who have been doing things in one way for years. It's very difficult for them. We must not try to change everything overnight on both the customer and the supply side. There is enough change here to be going on with. This is the only show in town. We've got to make it work or they'll have to try something else."

There is also concern over which takes precedence in any contractual dispute, DE's strategic brief or the prime contractor's project brief, but, said Edwards, this issue is likely to be resolved.

She added that the industry "has had a very positive and open dialogue with NHS Estates. We hope and expect that this relationship will be mirrored with Defence Estates".

Young said her appointment fills a vacuum. "There has been nobody to co-ordinate and develop implementation of prime contracting," she said.

Young said her first objective is to "make sure we get Scotland right, because it is the first regional prime contract".