Heating and Ventilating

The Olympics Delivery Authority has told its main contractors not to deduct cash retentions from those further down the supply chain.
The ODA for the London's 2012 Olympic Games has for some time not sought retentions from its main contractors but has gone one step further by calling on them to stop withholding retentions from tier 2 contractors.

The ODA has said it will encourage its main contactors to adopt the 2012 construction commitments which states that there should be no 'unfair withholding of retentions'. The ODA contracts allow for inspection of its main contractors' records and accounts at anytime which allows them to check whether a retention has been deducted from tier 2 contractors.

The ODA statement states: 'The contracts that the ODA executes with its tier 1 contractors do not discuss whether the tier 1 contractors should hold retentions in their commercial arrangements with their sub-contractors or not. The ODA has however created a contractual environment in which tier 1 contractors should recognise that there are fewer commercial reasons for deducting retention monies from payments to their sub-contractors'.

After more than 12 months of discussions, industry demands for the ODA to do something to help tier 2 contractors has resulted in the ODA issuing its latest policy statement.

Trevor Hursthouse, the chairman of the Specialist Engineering Contractor Group (SEC) and a 2012 task group member said: 'This is real progress. It would be a very brave tier 1 contractor who puts two fingers up to the ODA and does not enter into the spirit of its policy'.

He added: 'For tier 2 contractors, the statement is a powerful tool they can use to stop the taking of retentions. One hopes that now that tier 2 contractors are entitled not to have retentions taken from them, that they in turn will stop taking retentions and that this will cascade further down the supply chain.'