Some suppliers have been forced to take out loans to pay staff and suppliers
Suppliers to the Ministry of Defence (MoD) say they are still owed millions of pounds nearly three months after a delayed digital purchasing system was put into place, forcing some to take out loans to pay staff.
The Contracting, Purchasing and Finance (CP&F) was originally planned for implementation in November, but problems with data migration from older systems forced a delay to early December, according to a report in The Sunday Times.
Urgent action demanded
The MoD initially said suppliers should expect “minor disruption for up to two weeks” after the go-live date.
But the delays have now stretched on for nearly three months, with BAE Systems chief executive Ian King writing to the MoD demanding urgent action on the issue.
One supplier is still owed more than £5 million and has taken out bank loans to pay wages and suppliers, while another said the total unpaid might be as high as £2 billion, the newspaper reported.
The delayed payments issue first came to light in mid-February, and some smaller suppliers said at the time that as a result of press reports on the row a portion of the backlog had been paid.
Until then some said they had not been paid since October of last year.
Smaller businesses said they were considering threatening to stop work on important projects with milestones to meet in order to force MoD project managers to take action on the unpaid invoices.
Previously suppliers expected payment from the MoD within a week of an invoice having been signed off, suppliers said.
‘Last few’ invoices
The MoD said it was working to fix the issue and said in some cases late payments were the result of anti-fraud checks.
It said more than £7 billion has been paid to suppliers since the new system was implemented, representing nearly 500,000 invoices, and that it was “dealing with the last few”.
“We are engaging with suppliers and are confident that any delays will be resolved rapidly,” the MoD said in a statement.
The department added that it is committed to supporting the work of small and medium-sized businesses.
Ironically, the new CP&F system is intended to make dealings with the MoD more efficient by allowing data to be entered a single time and reused throughout the procurement process.
The system is being rolled out by Defence Business Services, a shared services centre set up to deliver functions such as corporate HR and payroll across the MoD, and which was operated by outsourcing company Serco until April 2016.
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