PARWICH.ORG

A recent Office of Fair Trading (OFT) report was pointed out to us by several local residents and had already been drawn to the attention of Parwich Parish Council and the Memorial Hall Committee. Although there appear to be no negative implications for the Memorial Hall rebuild, we felt it was important to report in full.

On Tuesday of this week the OFT issued a press release entitled ‘Construction firms fined for illegal bid-rigging’ summarising the completion of a three and a half year investigation.

They fined some 103 construction companies mainly for ‘cover pricing’, that is where companies entering competitive tendering submitted deliberately high bids to ensure an agreed company gained the contract. There were also a number of instances where building firms successfully gaining the contract, paid cash sums to ‘unsuccessful’ competitors, by means of false invoices. The events reported took place between 2000 and 2006.

A significant number of companies co-operated with the OFT investigation and consequently had their fines reduced by between 35 and 65%. It is recognised in the Report that these practices have been widespread in the industry.  Indeed the OFT had evidence relating to a considerably larger number of companies nationally, but chose to focus their investigation on the East Midlands, Yorkshire and Humberside.

The report further states that the companies fined may now have more reliable procedures in place than other companies not subject to investigation. The OFT and OCG (Office of Government Commerce) advise that the named companies should not be excluded from bidding for public projects on the following grounds:

• The Parties have received significant financial penalties appropriate to the infringement findings in the Decision
• It would be wrong automatically to assume that construction companies that are not named in the Decision have not also been involved in bid rigging
• As a result of the OFT’s investigation, the Parties can be expected to be particularly aware of the competition rules and the need for compliance and, if anything, are more likely to be compliant
• Many of the Parties have cooperated fully with the OFT’s investigation and a significant proportion have taken measures to introduce or reinforce formal compliance programmes and to ensure that their staff are aware of their competition law obligations.

The contractors for our new Memorial Hall, Wildgoose Construction Ltd were cited by the OFT as being involved is some 7 cases, between April 2001 and July 2003. However, they had stopped this practise some time before the start of the OFT investigation. Wildgoose, though fined, had their total reduced by 50% (the second largest reduction) as a result of their co-operation in the investigation.

The OFT report gives us no grounds to doubt either Wildgoose’s current trading practices or their conduct in relation to our project. Indeed the OFT goes further saying those companies who co-operated with their investigation are now likely to have more reliable policies for public tendering.

As soon as the Officers of Parwich Parish Council and the Memorial Hall Management Committee were told of the OFT report, they contacted our professional advisers, Prosurv Consult. Prosurv after consideration of the OFT report advised that there are no grounds for concern in our relationship with Wildgoose.

Wildgoose acknowledge their previous involvement but stress they had rejected cover pricing before the the OFT investigation at a time when it was still endemic in the industry and that they fully co-operated with the investigation.  Click here to see Wildgoose’s letter to Prosurv in relation to the Memorial Hall project received today.

For a more general account of the OFT report see

BBC News –Building companies fined £129.5m

Added 28th Sept 2009 – Wildgoose’s press release referred in the letter this post links to is as follows:

WILDGOOSE CONSTRUCTION LIMITED
OFT
PRESS RELEASE

WCL has been involved with the OFT’s enquiry into the construction industry since November 2004. Throughout this period we have given every assistance to the OFT in their investigation and this assistance is acknowledged by the OFT granting this Company leniency in connection with the investigation.

WCL actually ceased its involvement in cover pricing in 2004 prior to the commencement of the OFT investigation. We welcome the abolition of this endemic practice which has created a level playing field for all contractors to operate on.

The OFT restricted the investigation to our geographic area for reasons of evidence, reserves and timeframe whilst they acknowledge the practice was endemic throughout the industry. Please see http://www.oft.gov.uk/shared_oft/business_leaflets/general/Information-Note2.pdf

WCL has always operated with honesty and integrity in a very competitive market place where gross margins and profitability are low. This has always been the case in the industry particularly so with the specific contracts the OFT have identified.

Please refer any direct queries to Alan Clarke, Wildgoose Construction Ltd.