OFT eyes crackdown on bid-rigging scams

The Office of Fair Trading (OFT) is working with the Office of Government Commerce to help draw up a checklist for procurement officials to identify bid rigging across public sector contracts.

The move comes after the watchdog identified £500m-worth of bid rigging across 1,000 contracts in the East Midlands alone.

Speaking at the IBC UK Competition Law Conference in London last week, OFT chairman Philip Collins outlined the move after the true extent of bid rigging in the industry was discovered by companies coming forward as part of its leniency programme and its recent ‘come clean on cartels month’.

“Based on this modest sample, you get an impression of the possible national scale of the bid-rigging problem,” Collins said.

The guidance, which is due out in the first half of next year, is being drawn up after the majority of bid rigging identified by the OFT occurred on public sector contracts.

“This [guidance] will include, for instance, advice on how to spot bid rigging, how to reduce the risk of being a victim and what steps to take where the officials are, or suspect that they may have been, a victim,” he added.

An OFT spokeswoman said the new findings had identified the fact that education on helping contractors to steer away from bid-rigging activities was not reaching outside London.

“Part of this responsibility comes from competition lawyers who need to help spread the message,” she said. “The fact is that many companies might not be benefiting from the work being done on this area in London.

“One of the problems is the culture of the construction industry. Contractors are not very clued up on the issue of cover bidding. They don’t realise that it is illegal to deliberately put in a high bid in for a tender, knowing they won’t get the work, but wanting to keep their names in the frame. This automatically has an effect on the bidding process, which is deemed anti-competitive.”

The official would not disclose what sectors the bid rigging had been discovered, or whether it involved mostly small- to medium-sized contractors.

Asked whether the new figures would result in an increase in the number of dawn raids, she replied: “Watch this space.”

The official also hinted that a criminal prosecution in the construction industry wasn’t far away. Construction remains one of the OFT’s priority areas of investigation over the next three years.