Subbie wins historic legal battle

A glazing contractor has won a legal test case against Barratt, forcing the housebuilder to return the 3% it deducted from agreed payments.

An adjudicator ruled that Barratt 'improperly withheld' the cash, a decision that Contract Journal (CJ) said could open the floodgates to hundreds of specialist contractors to launch legal battles against housebuilders.

Southern Glass Services (SGS) decided to fight Barratt Southampton after its work on the Ocean Boulevard project in the city was completed in September 2007. Rates had been agreed in early 2005, but SGS received letters from Barratt later that year and in 2006 stating that discounts would be taken from payments to the firm. The adjudicator found that there was no contractual basis for the deduction and ordered that the discounts, running to £19,000, plus interest must be returned.

The news came as Galliford Try announced that it will seek a 10% cut from its housing suppliers due to difficult market conditions. "We won't ask for discounts retrospectively, like some companies,' said chief executive Greg Fitzgerald. 'but we will do it in an honourable and quiet way, negotiating cuts of at least 5-10% with our housing suppliers.'

Meanwhile, Building magazine reported that fit-out specialist Mitie Interiors has decided to rationalise its supply chain, following the lead of main contractors Costain, Wates, Bovis and Laing O'Rourke.

Mitie aims to cuts its current list of 200 preferred suppiers down to an 'elite' 50 which will receive preferential payment terms and retention releases.

In related news, Construction News (CN) reports that Bovis Lend Lease's attempts to revamp its preferred supplier lists will be extended to include SMEs. The firm is currently qualifying all 300 of its tier one major subcontractors with technology partner Achilles, a move which will remove the need for subcontractors to prequalify each time they bid for work. Now Nigel McKay, the firm's head of procurement and supply chain wants small and medium-sized subcontractors to sign up.

'While we will not be replicating the approach we took with tier one, it will be an accreditation process,' he told CN. 'We will consult with suppliers first because we need their support. We expect to start the process in the summer.'

But the company's attempts to get other contractors to take on its Building Confidence initiative have so far proved unsuccessful. Although Bovis had hoped to share the system with as many as possible to create a one-stop-shop for trade contractor accreditation, only Costain and Skanska have followed up on initial interest, reported CN.