UK faces ‘significant risk’ from procurement collusion, CMA warns

Unlock Editor’s Digest for free

Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.

UK government faces “significant risk of bid-rigging” by contractors, the competition regulator’s chief has warned.

Sarah Cardell, head of the Competition and Markets Authority, said the agency was trialling a new artificial intelligence-backed tool it believed could help companies catch up when bidding for public contracts.

The trial programme, which uses AI to scrape large volumes of data, is part of efforts to reduce fraud and waste in the UK’s £300bn-a-year public procurement market.

“We know that procurement markets are at significant risk of bid-rigging,” Cardell told the Financial Times. “We now have the ability to scan data at scale, bid data at scale, identify anomalies in that bidding data and identify areas of potential anti-competitive behavior.”

A government department pilot program “proved to be quite successful”, he said.

The CMA announced last month A new bid rigging investigation on suspicious activities related to the School Development Fund of the Education Department.

The agency said several companies providing roofing and construction services have reason to suspect they rigged bids to secure contracts through the fund, which is used to protect educational buildings.

In 2023, CMA 10 construction firms were fined around £60m For rigging to win demolition and asbestos removal contracts.

Public procurement in the UK has come under intense scrutiny in recent years after a number of contracts awarded in relation to the Covid-19 pandemic raised questions about a lack of transparency and conflicts of interest between suppliers and politicians. Purchases account for about a third of government spending, That totaled £329bn in 2021-22.

A new sanctions regime Set to take effect soon This year will mean companies will be banned from bidding on public contracts if they are found to be breaking competition laws.

“We think it is [the programme] It has a real potential to drive billions in savings for the public purse, but obviously increases public sector productivity, which is a key component. [agency’s] growth mission,” said Cardell.

The agency was given a specific mandate by the last government to prioritize growth, but has faced criticism from Sir Keir Starmer’s administration for delivering the metric.

The Prime Minister told a gathering of global business leaders in October that she “wants to make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room”.

Cardell also defended the CMA’s record, saying its strategic direction set two years ago “made clear that supporting productive and sustainable growth across the UK economy is a priority for the CMA”.

The watchman Also set to review the use of “behavioral remedies”. In 2025 the merger verdict. Rather than forcing companies to go out of business, such remedies use other measures – such as price freezes – to protect consumers.