Councils urged to sue building suppliers found guilty by OFT

21 May 2008

22 May 2008

Councils should sue building contractors if they are found guilty of breaking competition rules by the Office of Fair Trading (OFT), according to a government organisation.

The Association for Public Service Excellence (APSE) said if a supplier is prosecuted for bid-rigging councils have a duty to take legal action in an attempt to recover costs on an overcharged contract.

Last month the OFT announced it was investigating 112 construction firms for price fixing (News, 24 April). Paul O'Brien, chief executive of the APSE, said legal firms are offering services to councils on a no-win, no-fee basis. "The investigation is very high profile and it remains to be seen if any action will be taken," he told SM. "[Construction] companies have already admitted fault and councils are duty-bound to achieve value for money for taxpayers."

He said public sector buyers need to establish codes of conduct and insert anti-collusion clauses into contracts with suppliers to stamp out cartels. He also urged purchasers to publicise long-term construction plans and offer feedback on vendor performance.

"The private sector has a duty to police itself and this investigation has dispelled the myth that it is better than the public sector," O'Brien added.

Worcestershire County Council has written to all its contractors accused by the OFT. Out of the 112 companies listed, at least 28 have worked for the council. It said its director of finance was assessing the matter and, pending the investigation's outcome, would continue to deal with contractors normally.

The country's largest local authority, Birmingham City Council, has also contacted the accused suppliers to find out if the price-fixing activity affected any of the contracts it awarded. It said it always checks for signs of anti-competitive behaviour.

Nick Mann, spokesman for the Local Government Association, said councils have every right to know the extent of the allegations against suppliers if they have been "scammed". He added councils would have to be extra vigilant in the future if they are to spot bid-rigging activity.

A spokeswoman for the OFT told SM it is up to individual councils how they conduct themselves after the investigation. But in a statement issued to local authorities it warned them to wait for the results of the inquiry before proceeding.

SMmay2008

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