Joe's Blog

I have followed the Office of Fair Trading's (OFT) investigation into bid rigging in construction with interest and not a little bemusement over quite how they were.

I was therefore pleased to meet some of the OFT investigation team when I gave a presentation on e-tendering to the recent CIPFA Procurement and Contract Audit Forum Conference.

OFT defined cover pricing as: a tender where there was no genuine intention to compete for a contract and where the bid was based on information that had been received from another tender.

On cross-examination (OK, when I asked them politely) they did clarify that it is the exchange of information with other tenderers that is illegal not the lack of intention to compete.

Therefore, if a contractor gets a price from a competitor and adds 5% it is illegal. If the contractor does a rough estimate and adds 50% it is not. This seemed fair enough to me, although in the past I would have called both a cover price.

They also made it clear to the audience that companies have been caught by this investigation should not be excluded from tenders in the future, indeed it was their view that those that had been fined now would be less likely to transgress again.

It was also felt that the illegal practices were so endemic that if they had investigated all contractors, so many would have been found guilty that excluding them from future tender lists would in itself have been anti-competitive.

OFT are preparing guidance on how to spot collusion in tenders, which I think it is important that all QSs study.