Agents to the rescue! Recruiters make the AMS Framework compliant,-ish

Recruiters often come in for a fair bit of ribbing by us contractors and sometimes that’s…well; fair. But it’s only proper to tip our hats to them when they get it right.

And with all the wrongs that the Alexander Mann Solutions Framework imposes on us contractors, we need all the right and decent behaviour we can get, writes a veteran interim consultant working via the AMS Framework.

What we had

To fully appreciate the agents’ actions, you first need to step back and see what was before the AMS Framework and how agents were affected.

As the initiated know, Capita CL1 was the predecessor and under this, the agents were paid by Capita under the government’s very own ‘80%-5 day rule,’ meaning 80% of undisputed invoices to be paid within five days. Note, ‘paid’ under this Central Government Prompt Payment Policy means exactly that – cleared funds in the account, not  being told on day five “the cheque’s in the post.”

At the point of receipt of the monies, some agents would pay the contractor by BACS (involves a delay of three business days until cleared funds), while a few paid the contractors on a ‘same day’ basis. Either way, the agents operated a ‘pay when paid’ model which was fine, because the agents were already being paid promptly and in line with the government’s guidance – within five days, so there was never much of a wait for us being the next party to get paid.

What we’ve got

So imagine the loud groans among us contractors in June, when AMS replaced Capita, because written into the new AMS Framework was the option – and still is the option -- for the agent to pay the contractor within a hefty THIRTY days.

If that wasn’t bad enough, remember that both us and the agencies have already waited for more than a month without payment for services rendered because, under the AMS Framework, there’s first a 10-day self-billing process, and then there’s a 30-day term for AMS to pay the agency. So the ‘option’ the agency has of making us contractors wait 30 days to get our money only kicks-in once a 40-day period has passed.

Like anywhere else across the contracting sector (public or private), get landed with an agent who doesn’t quite know what they’re doing, and your hard-earned payment could get held up further. What helps them know what they’re doing is Payment Advice.

Payment Advice (cont.)

Issued by AMS to agencies in the chain, Payment Advice is a standard note advising the agent(s) how the big payment just made by AMS to them should be broken down, and individually allocated. It might sound overly simplistic, but imagine as an agent that you’d just received £150,000 in cleared funds into your bank account. To reconcile it, you’d need the payment advice from AMS to know exactly how and where the chunk of money is to be broken down, thus enabling you to deduct your commission, account for the VAT (not all contractors will be VAT-registered), and basically pay the right amounts to the right contractors.

Now you’re all set on the background, consider what has actually happened since the AMS Framework was introduced:

Week 1: AMS’s Payment was due to the Agent on Friday July 13th

• Payment Advice received on Friday July 13th July
• Cleared funds not received until Monday 16th July (i.e. 3 days late).

Week 2: AMS’s Payment due to the Agent Friday July 20th

• Payment Advice not received
• Cleared funds not received until Monday July 23rd (i.e. 3 days late).

Week 3: AMS’s Payment due to the Agent on Friday July 27th

• Payment advice not received until Monday July 30th  
• Cleared funds not received until Monday July 30th (i.e. 3 days late)

What’s evident here is a failure by AMS to issue both Payment Advice and Cleared Funds to the agencies on time. But despite the agents being up against it, and then having the option to sit on those cleared funds for 30 days, they haven’t.

Not for a single day. Well, ok, maybe just for one day if paying by Chaps and three days if paying by BACS. Either way, the agents have not held onto the money for a further THIRTY days, as the AMS Framework unfairly suggests is an option. The agents have actually paid it as soon as they can process it.

The good will of these agents has meant that AMS Framework contractors, far from having to wait 85 days to get their money, have gone through the following, quicker process:

• 10 days --> Contracted period AMS to raise self-billing
• 15 days --> AMS pays the agent the agreed amount (maximum term)
• 3 days --> AMS (so far) late in paying cleared funds
• 1 day --> Time required by agent to process payment and set up BACS to the contractor
• 3 days --> BACS payment period for contractor to receive cleared funds

32 days --> TOTAL (For contractor to receive cleared funds from confirmed goods receipt by client).

But if paid the same day (via Chaps), which some of us have, the wait reduces to a government prompt-payment-policy-compliant of 29 days! And hey presto!

Agents making AMS/CCS all but compliant -- for now

Thanks to the moves of some private sector agencies, the government’s preferred company to run its public sector framework for temporary labour services is finally reflecting the government’s own prompt payment policies. Even if paid by BACS, the actions of the agents (by choosing not to exercise their contractual option) means they are making the payment terms almost compliant – 32 days, compared to the 30 days stipulated under the Public Contracts Regulations of 2015.

For whatever reason, and we hope it’s because they dislike the sheer unfairness of holding onto someone else’s money for 30 days when they simply don’t need to, the agents are effectively ‘doing a Capita.’ They are paying us contractors once they’re paid. Why need it be more complicated than that?

However, you might not hear champagne corks popping among contractors (whose business risk is still 450% greater than under Capita’s CL1). Indeed, while there should be celebration by both AMS and the Crown Commercial Services (who awarded AMS the contract and who, ironically, are the authors of the government’s own Prompt Payment Policy) because some agents from the private sector have made them all but compliant, all good things must come to an end. Only we don’t know when.

In particular, CCS have informally said that AMS has reduced its standard payment terms to the agents from 40 days (10 for self-billing + 30 for its term to pay the agencies) to just 25 days currently, (10 for self-billing + a reduced 15 days for its term to pay the agencies ), albeit just for a ‘short period.’ The AMS Framework is a weighty-old agreement. Unsurprisingly, a ‘short period’ is one term it does not define.

Without this period, non-compliance will unfortunately return, as the combination of AMS’s standard 40-day term with the 3-day late payment period (to date), goes way beyond what’s stipulated under the Public Contract Regulations and the Prompt Payment Policy.

Your feelings matter

If you feel strongly about these matters (and for the good of contracting, I hope you do), then you can contact the CCS yourself by following the information in the contacts tab (RM3749). While there is only an ‘info@’ email address, as government contractors we know the government’s email format all too well, so therefore you can email the Framework Manager directly on [email protected].