Recruitment agencies supplying central government can expect to be paid “within days rather than months” from as early as September, under radical plans announced yesterday.
Speaking at yesterday’s Recruitment Supply Chain Business Forum in London yesterday, Matthew Griffin, head of sourcing & category management professional services at the Government Procurement Service (GPS), outlined measures designed to create “a dynamic and transparent supply chain, with no barriers to entry”.
“The key thing is payment through the supply chain, and we are looking to speed up payment to the second tier. We are talking about days rather than months.”
The announcement was given a warm welcome by those at yesterday’s Recruitment Supply Chain Business Forum, hosted by the Association of Professional Staffing Companies (APSCo) and the Asset Based Finance Association yesterday. The government’s plans come at the same time as the implementation of an APSCo code of conduct including an “APSCo clause” which will see signatories remove barriers to quick payment of agencies by middlemen such as recruitment process outsourcing organisations and managed service providers. (See “
APSCo launches new code of conduct for RPOs/MSPs,” 11 May 2012,
recruiter.co.uk).
GPS spends £450m a year on contingent staff, so the impact of the new model is likely to be significant for recruiters supplying central government. However, over time the impact could be even greater, as Griffin indicated yesterday that the new model “would be available to the wider public sector”.
As part of GPS’s efforts to speed up payments to suppliers, Griffin said the introduction of new payment cards would allow agencies to be paid direct.
The plans outlined by Griffin are in line with the government’s policy of speeding up payment to suppliers and especially to SMEs. “SMEs will have as much opportunity as anybody else,” Griffin promised.
Griffin told
Recruiter that the first stage of introducing the new model was four or five weeks away, when GPS is due to launch a new framework for interims, specialist staff, contact staff, clerical and blue collar staff covering 17 government departments.
Following an exercise to decide which suppliers GPS wishes to work with, Griffin said that contracts would be awarded in September. “There will then be a six-month implementation phase in the government departments – that is the intention.”
The new model will include the following features:
- Appointment of a neutral vendor. “GPS will work with the neutral vendor to manage the second tier and to make the process fair, transparent and open.
- “There will be no barriers to entry,” said Griffin, although he added the practical aspects of this were still being worked through. “We will create a model that is fair and sustainable.”
- Government departments will be able to pay agencies direct through the use of payment cards.
- There will also be no 'pay when paid' clauses. This is a clause in the contract between a recruitment process outsourcing/managed service provider (RPO/MSP) and a staffing company, which means that the staffing company is not entitled to receive payment from the RPO/MSP until the RPO/MSP has been paid by the end client.
- More “active management” of vendors’ performance. “If you are not performing it’s not a given that you will be retained,” said Griffin.
Keith Wilmott, chief financial officer at Venn Group, told
Recruiter that the prospect of the government speeding up payment to agencies was “terrific news”.
“The important thing in recruitment is the working capital cycle. Anything that reduces that cycle and has got to be valuable.”
Darren Lancaster, managing director Hudson RPO EMEA regions, told
Recruiter: “I think this announcement is great for the agencies, who can only take it as a positive message.”
Ann Swain, chief executive of APSCo, said Griffin’s announcement was “big ticket”.
