It wasn’t pretty, was it. Shortly after the Office of Fair Trading published its Statement of Objections last Thursday morning, accusing 112 construction companies of bid-rigging activities, the consumer media tore into the industry.
Respected construction men (and women) found themselves grilled by hard-nosed hacks under the glare of TV cameras, wild stories circulated of schools and hospitals being ripped off to the tune of £50m, and the general image portrayed was of an industry that would mug its own granny for her pension.
Of course, the reality is somewhat different. As Construction Confederation chief executive Stephen Ratcliffe points out on our back page today, only nine out of the 112 firms accused by the OFT have been accused of offering compensation payments to rival bidders, involving just 12 potentially suspect contracts.
The overwhelming majority appear to have been accused of cover pricing, which while still illegal, is hardly a rip-off of tax payers on a grand scale.
This was the line taken by many of those who spoke up for construction last Thursday. But, in trying to put the OFT’s accusations into context, they unwittingly had the opposite effect. Indeed, their words were twisted to appear as though they were actually defending the practice of bid-rigging.
Unfortunately, the consumer media doesn’t play fair. Nor, it seems, does the OFT, which made little attempt to distinguish between cover-pricing and more serious acts of bid-rigging when it released its statement.
This was never going to be an easy story for the industry to deal with. But next time, construction might want to think a bit more carefully about how it prepares its defence. Though after last Thursday, let’s hope there isn’t a next time.
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Comments (2)
With reference to the bid-rigging saga it will be the likes of smaller sub-contractors to these companies who are left to carry the can when they go out of business unable to pay hefty fines.
These companies will then re-emerge with a different name and continue where they left off. We then end up not getting paid for bona-fida work carried out.
This has not been thought through and we have already discovered one company who has gone into liquidation leaving us unable to recover the debt.
Posted by Kevin Allen | April 24, 2008 1:18 PM
Posted on April 24, 2008 13:18
To be honest I have been waiting for something to hit the news on this matter at some point. It is obviously going to happen.
There are very few companies (relatively) out there that can fund the size of works at the top end of the industry (you can probably name most of them on one hand). I sub-contract to some of these and know that the people near the top of these companies have dotted between the companies to elevate their position.
So it is obvious that when this happen you get some communication between the companies. Across the industry I have seen many occasions where dummy quotes have been provided.
I would not say this was rife but it is happens and not just in the construction industry! I agree with better regulation to an extent but I am concerned it will overcomplicate the tender process in doing so.
Posted by Paul Mearns | April 30, 2008 3:18 PM
Posted on April 30, 2008 15:18