The Competition and Markets Authority cracks down on bid-rigging in construction Procurement

The UK’s Competition and Markets Authority (CMA) has launched a recent investigation into possible bid-rigging in roofing and construction contracts linked to a school improvement project.

Types of bid-rigging

Bid-rigging occurs when tenderers agree to limit competition in a procurement process and can take several forms, such as:

• Bid rotation – where companies agree to take it in turns to submit the lowest bid
• Bid suppression – where a company agrees not to bid, or to withdraw a bids
• Cover pricing – tenderers arrange for one or more of them to submit an artificially high bid, distorting the contracting authority's impression of the market.

Why bid-rigging matters for local authorities

Bid-rigging undermines fair competition, leading to inflated contract costs and poor value for money. This has been particularly prevalent in construction and infrastructure projects, with several findings of collusion in procurement processes by the CMA in recent years.

As local authorities manage significant procurement budgets, ensuring a fair and competitive tendering process is essential to protecting public funds and securing high-quality services.

Debarment risks

The Procurement Act strengthens the penalties for companies involved in bid-rigging with the introduction of a debarment list which would prevent a companies on the list from bidding for future public sector tenders for a period of up to 5 years.

The rules on discretionary exclusion have also been widened so it is easier to exclude an organisation if it has been found by the CMA to have infringed competition law or if there is reasonable evidence of infringement or if a tenderer acts improperly in a procurement process, for example, by incorrectly signing an anti-collusion certificate.

What local authorities can do

Remain vigilant and proactive:

• Train procurement teams to recognise signs of anti-competitive bidding behaviour
• Require tenderers to complete anti-collusion certificates to focus their minds on the risks
• Report suspicion of bid-rigging to the CMA for further investigation. The CMA has recently launched an AI-powered tool to analyse bidding patterns, helping public bodies identify anomalies suggestive of collusion. Early trials have shown promising results in flagging potential anti-competitive behaviour in procurement processes
• Ensure robust procurement processes that encourage competition and deter collusion

For more information, Please contact Stephanie Rickard in our Procurement team on 0117 314 5675, or complete the form below.