Beneath the cover price

It is reassuring to see that Tony Bingham (7 September, page 44) has rubbished so effectively the Office of Fair Trading’s (OFT) heavy handed attempts to outlaw the practice of cover pricing - a device in which a contractor avoids having to inform the client that he doesn’t want the job by simply making sure his tender will be higher than the others. Bingham suggests the OFT did not understand the difference between a cover (legal), and collusive tendering (illegal).

The market place is notoriously uncertain. Tendering strategy is almost an art form - which schemes to bid for, guessing how they will fit your programme, and allowing for schemes to be abandoned at the last minute. These, and many other constraints, are matters of fine judgment. One particular factor is the damage to the relationship between contractor and client by declining to tender, and the risk that the client will not ask the contractor to tender again.

Thus, cover pricing must continue to be a device available to the over stretched contractor.

But one thing that Bingham overlooks is that the contractor has to know at least one of the other bidders before he can get a cover. The cover price itself has to be judged carefully, so that it looks realistic, yet safely too high to be considered. I have suspected in my professional life there to be a murky underworld network of exchanging information by contractors during the tendering process. Whether this amounts to collusion is a matter for speculation, but if the OFT found evidence, they may well be justified in punishing some contractors.

Malcolm Taylor, FRICS, Lancaster