Local authorities start to shun OFT contractors

1 February 2010

Local authorities are making moves to exclude contractors implicated in the Office of Fair Trading inquiry into bid rigging from tendering opportunities, says a report in Building. It revealed that two large councils have questioned firms about their role in the investigation, while lawyers claim many other councils are also considering the exclusion of implicated contractors from tender lists.

North Yorkshire revealed it has written to all 103 firms named to ask if they had been involved in anti-competitive activities while Leeds Council has stepped up its investigation into the 32 firms it uses.

Leeds has written to contractors seeking details of their involvement in bid rigging and said it may exclude firms from future work, including the £1.2 bn Yorbuild framework.

The council has not disclosed which firms received letters but the Office of Fair Trading (OFT) alleged Carillion, Strata, Caddick, Richardson Projects, P Casey and Henry Boot had taken part in cover pricing on projects in Leeds.

A number of lawyers also reported a rise in the number of local authorities and public sector clients enquiring about firms targeted by the investigation and warned that some may be already blacklisted by councils. “We’re definitely seeing an increased level of awareness from public sector clients,” one lawyer told Building.

However, there was also good news for contractors who won an early courtroom battle with the OFT, after a judge ruled that it would have to pursue cases on an individual basis rather than in batches.

Tristan Mears-White, a partner at Watson Burton, said: “The ruling could save contractors tens of thousands of pounds. Firms might have been required to turn up to several different hearings otherwise.”

A boss of a contracting firm said: “This decision doesn’t suit the OFT at all because of the resource issue. It’s not exactly a major win for the contractors, but it’s undoubtedly a headache for the OFT.”

Meanwhile, a company on the OFT's list that had entered administration has been partially bought by Zimbabwean firm Gombe Holdings. Two substantial contracts run by Concentra, formerly known as Durkan Pudelek, are now owned by Gombe. Last September, Concentra was fined £3.3 m by the Office of Fair Trading (OFT).

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