Scottish Government lowers Project Bank Account thresholds from 19 March 2019

United Kingdom

Project Bank Accounts (PBAs) are ring-fenced accounts that see payments made directly and simultaneously by public sector clients to members of the construction supply chain. They were introduced as Scottish Government policy in 2016 to facilitate prompt contract payments and protect from upstream insolvency.

Changes

The Scottish Government has introduced some changes to increase the number of sub-contractors able to access PBAs. From 19 March 2019, public bodies covered by the Scottish Public Finance Manual must include a PBA in tender documents for public works contracts with an estimated value more than or equal to:

  • £2,000,000 for building projects  (previously £4,104,394)
  • £5,000,000 for civil engineering projects (previously £10,000,000).

Provisions for not deploying a PBA in the following circumstances have been removed:

  • where the main contractor undertakes to self-deliver a significant amount of the contract
  • where the PBA is unable to be opened for the early stages of a project on site.

Other exemptions remain although PBAs ought to be included in tender documents until it becomes clear that an exemption may apply.

Original PBA application thresholds and non-deployment provisions introduced by SPPN 10/2016 apply until 18 March 2019. The changes do not apply to existing contracts or to procurement procedures underway by then.

The guidance is not mandatory for other bodies that can award public contracts, and other organisations providing procurement routes for the construction of public buildings and infrastructure.  However, these bodies are encouraged to:

  • implement PBAs; and
  • integrate the associated guidance into their procedures.

You can access the guidance here.