The Office of Fair Trading (OFT) issued fines totalling £129.5 million to 103 construction firms after an investigation into the rigging of contracts.
The OFT said it had detected bid-rigging activities on projects across England worth more than £200 million, including schools, hospitals and apartment blocks.
It OFT said it had found 199 tenders dating from 2000 to 2006 where bid-rigging took place. This was mostly in the form of so-called cover pricing, where one or more bidders arranges for competitors to put down high bids so as not to win the contract but to increase the appearance of competition.
According to the OFT, this distorts the tender process and makes it less likely that other potentially cheaper firms are invited to tender. It added that in 11 instances the lowest bidder faced no genuine competition at all, as all other companies involved in the tender had put down cover bids.
The OFT warned that revelation could be just the tip of the iceberg, with the practice of cover pricing described as "widespread and endemic" in the construction industry.
It uncovered evidence of cover pricing in over 4,000 tenders involving more than 1,000 companies but said it had to focus on the companies and instances where evidence was strongest.
In six instances, the OFT found that money had changed hands between the firms, with the successful bidder paying "compensation" up to £60,000 to its unsuccessful rivals by raising false invoices.
Of the firms fined, 86 received a reduction in their fines because they admitted their involvement in cover pricing. The average fine was £1.26 million, which the OFT said represented 1.14% of their annual worldwide turnover.
The ten biggest penalties issued were:
Information Note
A separate but related report appears in this month's People in Housing section.
The Chartered Institute of Housing Scotland (CIH), in partnership with the Scottish Government's Scottish Centre for Regeneration, has opened the entry process for the CIH Scotland Excellence in Regeneration Award.
The award recognises the vital role that high quality regeneration projects can play in transforming areas by building successful communities. It identifies four key criteria for delivering regeneration that creates sustainable communities:
Speaking at the launch event - Excellence in Regeneration: Are you in the Zone? - Alex Neil MSP, Minister for Housing and Communities said:
"I am pleased to offer Scottish Government support to this award. The housing sector has a key part to play in achieving lasting transformation for places across Scotland, benefiting those who live and work there.
"The award offers the housing sector an excellent opportunity to identify, profile and share good practice and I would encourage all those involved in delivering successful regeneration to share their experiences and learn from others."
Craig Stirrat, Chair, CIH Scotland added:
"Scotland is home to some fantastic examples of successful regeneration projects. I urge all housing organisations, community groups and others involved in regeneration to take this opportunity to tell us about the good work they are doing and celebrate the success they are having in transforming communities.
"The Excellence in Regeneration Award recognises that physical improvements go hand in hand with social and economic developments. The CIH Action Plan on Community Regeneration issued earlier this year llustrates this by identifying good practice and setting some policy and practice challenges for the future."
The closing date for entries to the award is Monday 16 November 2009. More details on the award and how to apply are at www.cih.org/scotland/building-successful-communities.
ASRA Greater London Housing Association
The completion of construction of ASRA Greater London HA's 20-storey housing development in Greenwich was marked with a 'topping out ceremony'.
Work began on the landmark scheme in 2007. The £25 million Elmgrove Tower will provide 119 high quality affordable homes for local people.
The Association, which is part of the LHA-ASRA Group, has worked closely with Greenwich Council to transform the site - a former nursing home in Plumstead.
Elmgrove Tower was awarded Demonstration Project status by Construction Excellence, an organisation set up to monitor and improve performance in the construction industry. This highlights developments currently being built, showing examples of best practice within the construction process.
Homes will include four-bedroom duplexes, as well as one, two and three-bedroom apartments available for rent and low cost home ownership.
Each home will have its own private amenity area, consisting of individual balconies for the apartments or private gardens for the duplex homes. There will also be a communal courtyard with a secure children’s play area.
Elmgrove Tower has been commended for its provision of Lifetime Homes, going beyond standards set by the Government for adaptable homes. For example, 10% of homes will be accessible for wheelchair users.
A bio-mass boiler, which runs on wood pellets, will provide renewable energy for the whole building. This will reduce carbon emissions from the homes, and keep running costs low for residents
Designed by London-based Alan Camp Architects and built by Galliford Try, Elmgrove Tower is expected to be ready for people to move in by August 2010.
