The Uk Office of Fair Trading has uncovered systematic price fixing and seemingly corrupt practices in tendering for large building projects. The firms accused by the government watchdog include some of the biggest construction companies in the UK including Balfour Beatty and Carillion.
The Office of Fair Trading investigation is believed to be one of its biggest and reveals practices that could have cost UK tax payers billions over the last few years. The OFT has been met with a ‘hands up’ from over 40 firms who have already admitted the charges
The scandal revolves around building firms acting together in ‘cover pricing’.’Cover pricing’ is where one of the bidders deliberately puts in a tender which is too high to win a contract. The contact goes to another company which then compensates the ‘rival’. The OFT says the client, which could be local authority or business, has no idea that the firms have been colluding.
Consequently it is left “with a false impression of the level of competition” which may result in it paying “inflated prices”. The building contract won by the building companies cover a wide range of projects, including tenders for schools, universities and hospitals.
In other construction news it was recently announced that Balfour Beatty recently won the contract to construct the venue for the swimming and diving events for the Olympic Stadium and Aquatics Centre for the 2012 Games in London.
