Contractors fear clients' paranoia after OFT fines

Public sector clients are pressurising contractors to keep silent on every aspect of work they are bidding for, in the wake of the Office of Fair Trading's (OFT) bid-rigging investigation.

Contractors are worried the mood of paranoia sweeping the industry will damage the bidding process.

One said: "Construction has always been a gossipy industry where people talk all the time. It will be a sad day where even the most innocent conversation can be painted as something more sinister.

"A quick chat about who is bidding can save you time and money if you know you won't have much of a chance from the start. But if everyone is terrified to say a word, then a lot of firms might find themselves wasting a lot of time and effort."

Other concerned firms have told CJ that they have been threatened having contracts they are on the point of winning taken away from them after information about the tender process came out, even though it was revealed by unsuccessful bidders.

A source at one civils firm said: "Contractors are asking us more and more about our privacy measures since the OFT investigation. One major public sector client even told us we would lose a contract we were about to win because we were tipped to take it in the construction press.

"The client thought that we must have announced the information ourselves, but the truth is that the information could have come from any one of our competitors."

Another source added: "Everyone knows now that collusion is wrong and that conferring with other bidders about a job is likely to get you into trouble. But the OFT investigation has really spooked a lot of clients and they are now taking their concerns about privacy to unprecedented levels."

The OFT fined 103 firms a total of £129.5m September after it discovered evidence of illegal bid-rigging, mostly in the form of cover-pricing. Cover-pricing involves one or more bidders obtaining artificially high bids from a competitor. The bids are submitted as genuine bids, even though they are really used to maintain a contractor's profile in the eyes of its client, giving the client a mistaken impression of the level of competition for the work it is putting out to tender.