news story

17th April 2008

MP Calls for Inquiry into Southmead Construction Contract Following OFT Report

Today's report by the Office of Fair Trading into collusion by building companies bidding for public projects has cast questions over plans for the Southmead 'super-hospital' according to Northavon MP Steve Webb.

The OFT alleged that 112 construction firms "...have engaged in bid rigging activities, and in particular cover pricing. Cover pricing describes a situation where one or more bidders collude with a competitor during a tender process to obtain a price or prices which are intended to be too high to win the contract. The tendering authority, for example a local council or other customer, is not made aware of the contacts between bidders, leaving it with a false impression of the level of competition and this may result in it paying inflated prices."

One of the major companies named by the OFT is Carillion who are one of the two shortlisted bidders to build the £300 million super-hospital at Southmead. Now Northavon MP Steve Webb has said he will be contacting the OFT as a matter of urgency to ask them to investigate whether the Southmead bidding process was fair and open.

Steve Webb said:

"Huge profits are being made at the taxpayers' expense by private companies who build new schools and hospitals. Scrutiny of the bidding process is almost impossible because we are always told that they are commercially sensitive.

"Yet the Office of Fair Trading has shown that the taxpayer has potentially paid many millions over the odds because of collusion by bidders. Dozens of companies have already admitted that this goes on.

"Given the huge sums due to be spent in our area on a new super-hospital we need to be sure that we get value for money from every penny. I will therefore immediately be in contact with the OFT to ask them to investigate the Southmead bidding process to ensure that everything was above board".


Note:

An indication of the secrecy surrounding the bidding process is contained in January 2008 board papers from North Bristol Trust, which say:

"Given the highly sensitive and commercial nature of the information, the public session of the Trust Board will not be asked to review the scores and assessment of each bidder scheme. This will be undertaken in private session. At this session, the Trust Board will be asked to approve the issue of the invitation to bidders to continue to the next stage of competitive dialogue."