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Apr 20 2008

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UK bid-rigging scandal

Before I went on holiday, there was speculation about how many companies would be identified by the UK’s Office of Fair Trading as being involved in construction bid-rigging (see Contract Journal for some background). On Thursday, it was revealed that 112 companies had been accused of rigging thousands of public sector contracts worth billions of pounds, including some well-known names such as Balfour Beatty and Carillion (see Guardian article).

One thing this investigation highlights is the risks associated with lowest price tendering, rather than looking at longer-term partnering arrangements or frameworks, ‘best value’ or ‘whole life costing’ approaches, etc. As UK membership organisation Constructing Excellence argues: “collaborative working is a major part the solution”:

  • Collaborative working and the selection of integrated project teams require more rigour and scrutiny at selection and award stages than traditional, historic approaches of lowest price tendering, which unduly emphasise lowest price in selection without giving enough attention to, for example, capability and capacity.
  • The use of open book accounting, and other commercial techniques of collaborative working, when established at the outset and even during the bid stages, reduce any risk of cover pricing and collusion.
  • One-off clients are arguably more likely to be vulnerable than experienced, regular clients. Past demonstration projects by Constructing Excellence have shown that such one-off clients also benefit from collaborative working, but they need to follow published guidance and the best approach is to engage a client advisor with strong experience of collaborative working.

(While on the subject of Constructing Excellence, I see that a CE employee has just started a blog – one of the first articles concerns the OFT investigation; and, having mentioned the Guardian, I got a very short letter – about a Crewe footballer’s name – published in Saturday’s edition, sent via my smartphone from Italy.)

Permanent link to this article: http://extranetevolution.com/2008/04/uk-bid-rigging/

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