OFT inquiry latest

A gathering of contractors calling itself the ‘Calorie Club’ which met to fix bids and draw up cover prices could form a major part of the current Office of Fair Trading (OFT) probe into construction.

The club, given its name because ‘everyone gets fat at the Calorie Club’, met to discuss public sector jobs, mainly housing, claimed a report in Contract Journal (CJ). Active mainly in the South East several years ago, the group disbanded when local authority procurement practices started to change.

‘It was held in a different place every time,’ one contractor told CJ. ‘There were about eight contractors involved regularly, including some big names.’

Building magazine reported that US law firm Cohen, Milstein, Hausfeld & Toll (CMHT) is offering services to clients and councils that suffered as a result of bid rigging. The firm, which forced British Airways and Virgin Atlantic to pay $200m to passengers after a cartel investigation, operates on a no-win, no-fee basis and the news indicates that on top of large fines from the OFT guilty contractors can expect to be hit by hefty compensation payments.

Taking up the same story, Construction News (CN) quoted Scott Campbell, an associate at the firm’s London office, as saying that affected clients should join forces in a legal action against any firms found guilty. ‘The bigger companies are obviously those ones which claimants will want to pursue,’ he said. But Peter Cunningham, chief executive of Constructing Excellence’s Construction Clients Group warned against this tactic saying ‘class action would be a backwards step towards a confrontational way of working.’ Instead he called on clients to change procurement systems to drive out illegal activity.

The client backlash has already begun, claims Building. Several local authorities have demanded assurances that their supply chains were not involved in bid rigging. Councils in Manchester, the Midlands and Surrey are thought to have sent letters to contractors asking them to confirm in writing that they are not guilty.

Building also reported that the nine firms being investigated for the most serious offence of making or receiving compensation payments for losing bids include the three large firms Mansell, Bowmer & Kirkland and Durkan Pudelek. Failed contractor Thomas Fish is also understood to be among the nine.