Don't exclude culpable suppliers, OFT advises

4 October 2009

05 October 2009 | Jake Kanter

Buyers have been urged not to blacklist construction suppliers punished by the Office of Fair Trading (OFT) for bid-rigging.

The watchdog last month fined 103 construction firms a total of £129.5 million. It found the firms were engaged in illegal, anti-competitive activity on 199 contracts between 2000 and 2006.

The OFT said this was mostly in the form of "cover pricing", where competing contractors collude to fix a high price for a deal. But in a briefing note, the OFT and the Office of Government Commerce (OGC) called on purchasers not to exclude guilty suppliers from tenders, but to monitor bidding closely for anti-competitive behaviour. Guilty firms are more likely to be compliant with competition rules in the future, the OFT said.

Paul O'Brien, chief executive of the Association for Public Service Excellence, was also against debarring construction firms. He added, however, that purchasers must demand suppliers disclose past involvement in collusion when bidding for contracts.

He advised councils to look at recovering damages if they had lost money as a result of bid-rigging. "Where there has been loss to the public purse councillors should ensure it finds a way back to the local authority," he said.

Simon Williams, director of cartels at the OFT, agreed. "Local authorities that can prove they are at loss aren't without redress. They can pursue private action if they want," he told BBC Radio 4. "It would not surprise me if a local authority came forward and took legal action," added Antony Faughnan, chairman of the CIPS construction procurement group. "This issue has been hanging over the construction industry like the sword of Damocles."

SMoct2009

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