The Construction Confederation has called on the Office of Fair Trading (OFT) to ensure a sensible and proportionate response to the findings of their four-year investigation into industry practices.

The bulk of the alleged infringements listed in the published Statement of Objections are examples of cover pricing, where busy companies who did not want to win the work submitted an artificially high bid.

While acknowledging that cover pricing may in some circumstances constitute a technical breach of competition law, the Confederation believes these historic infringements need to be viewed in context.

The Confederation says that if infringements are proven, then any fines levied by the OFT should be proportionate and those who are found to have contravened regulations in this way certainly should not face double jeopardy by being omitted from future public sector tendering lists.


Construction Confederation Stephen Ratcliffe said: "Let's be clear what we are dealing with in cover pricing - there was no intention to make a single penny at the tax payers’ expense, just an attempt by busy contractors not to win work without upsetting the client.

"Cover pricing was symptomatic of a time when work was won on lowest price and short term relationships were the norm. Culture in the industry has since shifted significantly and single stage competitive tendering based on lowest price is declining.

"In recent years, the industry has gone to great lengths to stamp out the practice. For example, companies are already ensuring that employees understand requirements for compliance and have written to all staff establishing protocols."

There has been widespread concern at the possibility that the OFT might take disproportionate action to deal with the widespread practice of cover pricing by imposing excessive penalties on contractors. Fines could amount to a maximum of 10% of turnover which, in a sector where profit margins are traditionally 2.5%-3.5%, would threaten the viability of companies, the work programmes they deliver and the jobs they provide.

(CD/JM)