Carillion has dropped its 65-day payment period for suppliers on Ministry of Defence work.

The contractor, which has been criticised over the length of its payment periods, is understood to have agreed to pay suppliers within 30 days on most MoD projects. Carillion鈥檚 work for the client includes the 拢12bn Allenby & Connaught barrack refurbishment scheme

Thirty days is the payment period approved by the Office of Government Commerce鈥檚 Fair Payment Charter, which also warns that contractors that do not comply with it risk losing out on public sector work.

The move has given rise to speculation that Carillion may roll out the policy for other public sector clients. A spokesperson for Carillion could not confirm this, but said: 鈥淲e鈥檝e signed up to the Defence Estates charter and are beginning to make any necessary changes to our payment processes. We鈥檒l review the proposals for other MoD clients when they ask us to.鈥�

It also emerged this week that the contractor had formed a dedicated business for public sector work as part of a restructuring ahead of its 拢572m takeover of Alfred McAlpine.

We will review the proposals for other MoD clients when they ask us to do so

Carillion spokeswoman

Carillion Government Services will be responsible for work in health, education and defence. It will be headed by Shaun Carter, the former managing director of TPS, Carillion鈥檚 拢30m-turnover consultancy business. TPS will be headed by Frank Huidobro.

McAlpine鈥檚 public sector work is expected to be included in the division.

The McAlpine takeover was approved by shareholders this week and is expected to complete midway through next month.

Postscript

Adrian Bull, Carillion Health鈥檚 managing director has left after its recent restructuring.

For the full story of the McAlpine deal search