It is hardly surprising that up to a third of the firms fined for bid-rigging are said to be considering appeals.
The woolly explanations behind such wildly varied fines naturally leaves contractors feeling unfairly treated. What is very worrying from a jobs perspective is that while most big contractors can pay up without to much damage to their balance sheets, many smaller contractors feel they have little left to lose.
Whatever the final count on who finally decides to risk stirring up further OFT wrath with an appeal, it is a fair bet that the whole sorry matter is going to drag on for sometime yet.
Since that is the case, at this juncture it is worth dwelling on how much cover pricing really cost tax payers and clients.
In most of the cases, the OFT's own inquiries suggest just two bidders pitched cover prices, the rest - usually four firms - put in market rates. While it is hard to say for certain that the winning bid was unaffected, it seems a fair bet that in most cases the client achieved a similar value for money. Of course there were a few cases where big kickbacks were handed out, but these were in the minority.
One other issue that needs to be properly aired is why cover pricing toot root in the first place.
Between 2001-2006, firms were trying to cope with a glut of tenders with precious few estimators to call on. More importantly the quality of public sector tender information was quite poor in that period. Estimators complain that around that time the detail in tender documents was at best sketchy and often insufficient time was allowed to build reliable bids.
Against this background, are contractors entirely to blame? Weren't many simply trying to reduce their risks while not offending the sensibilities of clients operating important frameworks?
Of course a lot has changed since then and now the real threat to outturn costs comes from another direction, suboptimal bidding. Most construction firms say there is an epidemic of suicidal bids sweeping through the industry. This will ultimately be damaging for clients and the supply chain.
In the spirit of level playing fields and value for money, perhaps the OFT should ask a few public sector clients how far they feel it is fair to squeeze contractors' prices. Encouraging and then taking suicidal prices, may not be bid-rigging, but it can have even more dire consequences for the public purse.
Subscribe to CJ's blog by RSS