The Office of Fair Trading’s (OFT) decision to publish a list of firms it suspects of bid-rigging and cover pricing activities has left contractors and clients confused and fearful of the repercussions.

After a three-year investigation, 112 contractors were named, among them Balfour Beatty, Carillion, Willmott Dixon, Kier and Morgan Ashurst, and each has been sent a statement of objections outlining evidence of collusion during the procurement of construction contracts. Many now fear that public sector clients will remove them from tender lists.

The Highways Agency, which spends more than £1bn with the industry each year, has already been scrutinising firms it is involved with and NHS chief executive David Nicholson has written to its directors of finance warning them to report suspicions of cover pricing to its internal fraud squad.

The Construction Confederation has written to every local authority in the UK to reassure clients. Meanwhile, law firm Pinsent Masons, which is advising several companies in the investigation, has tried to downplay the seriousness of cover pricing.

‘It is important that public sector clients do not overreact,’ said competition partner Alan Davis. ‘First, these are only allegations by the OFT and the companies involved have the right to defend themselves. Second, it would be inappropriate and may breach EC public procurement rules to penalise companies listed in the OFT’s press release by removing them from tender lists at this stage.’

A total of 37 firms, including Balfour Beatty, Carillion and Morgan Sindall, have applied for leniency, which would result in a reduction in their potential fines if they clean up their acts. And as CM went to press Balfour Beatty subsidiary Mansell was one of nine firms understood to be implicated in the more serious allegations of breach of competition law.

The 112 accused firms now have until June 30 to contest the allegations and those found guilty could be fined up to 10% of UK turnover.

Source

Construction Manager