Campaign to abolish retentions finally lost

The government has decided that retentions will definitely not be scrapped following last week's trade and industry select committee evidence session.

The Office of Government Commerce (OGC) and the Department of Trade and Industry (DTI) had been called back to the committee to give "more detail" following what the committee's chairman Martin O'Neill described as a "disappointing" response to its report on retentions earlier this year (CJ 12 March).

During the 45-minute hearing officials from both apartments argued that larger divisons such as Defence Estates and the Highways Agency were abandoning the use of retentions.

But, Mark Gibson, director general of the business group at the DTI countered: "Big name departments are making great strides considering Egan principles were only introduced in 1999.
The industry also has a key role to play in giving client confidence in producing defect-free work."

"And many smaller departments have inexperienced procurement teams which rely on retentions to give them confidence."

O'Neill quizzed the officials on why one of the government's largest departments, the Home Office, was still holding retentions valued at thousands of pounds against demolition contractor Brown and Mason as work nears completion on the £311m Marsham Street project.

"It seems ludicrous that you talk about retentions being linked to defect free work when monies are held from a demolition contractor until much later on in the project," said O'Neill.

OGC deputy chief executive John Oughton replied that this was an issue and vowed that the department would get to the root of the problem.

Asked when occasional clients would no longer use retentions as they improve on best practice, both officials were unable to give a timescale.

However, Gibson said he hoped that retentions would no longer be an issue when the industry reaches the OGC's Achieving Excellence 2005 target for 70% of work to be defect free and delivered on time and budget.

"We hope to see a transition away from retentions," said Gibson. "The target is a challenging one considering the industry is currently delivering 11% of projects with defects."

Both departments maintained their position to ignore the Specialist Engineering Contractors' Group target of 2007 to phase out retentions altogether, while Oughton pledged that the OGC would provide evidence, currently unavailable, of retention use by departments.

The committee is expected to announce its response to the evidence session after the summer recess. A short report will be published in September.