Contractors have hit out at an investigation by the Office of Fair Trading into the construction industry and called for public sector clients to be targeted as well.
Earlier this month the OFT conducted a series of raids on contractors in the East Midlands as part of a campaign against the industry’s alleged anti-competitive cartel practices. However, contractors have told Building that they believe that the public sector should also be in the dock, citing anecdotal evidence of anti-competitive practices by councils and government agencies.
The firms claim that the practice of colluding to give agreed quotes or “cover prices” for local authority work was commonplace because of rising bidding costs.
One contractor said: “This is ludicrous – the government should practise what it preaches. As the financial year draws to a close, many public sector clients need to spend their budgets quickly. They ask contractors to complete work rapidly and provide what are in effect ‘cover prices’ to give the impression that they are competitive. How about investigating this?”
It is understood that the University of Reading is carrying out a study into bid costs, which is being sponsored by Constructing Excellence. Its final report, due out this year, is expected to show costs can be up to 5% of contract value.
The OFT confirmed that it was concentrating on construction and said that its investigation overlapped with a Serious Fraud Squad investigation into contracts at the Queen’s Medical Centre, Nottingham. Over the past year the OFT has targeted the roofing and demolition sectors as well as traditional builders.