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The UK government faces a “significant risk of bid-rigging” by contractors, the top of the competition watchdog has warned.
Sarah Cardell, head of the Competition and Markets Authority, said the agency is testing a brand new artificial intelligence-based tool that it believes could help detect firms colluding when tendering for public contracts.
The testing program, which uses AI to investigate large amounts of information, is an element of a bid to scale back fraud and waste within the UK's £300 billion-a-year public procurement market.
“We know there’s a major risk of bid-rigging in procurement markets,” Cardell told the Financial Times. “We at the moment are in a position to scan data at scale and provide data at scale, detect anomalies on this supply data and discover areas of doubtless anti-competitive behavior.”
The pilot program with a government agency “has proven to be quite successful,” she said.
Last month, the CMA announced a brand new investigation into bid rigging for suspicious activity related to the Department of Education's School Improvement Fund.
The agency said it had reason to imagine that several firms providing roofing and construction services colluded to control bids to secure contracts for the fund, which is used to guard educational buildings.
In 2023 the CMA 10 construction firms were fined almost £60m for manipulating offers to win demolition and asbestos removal contracts.
Public procurement within the UK has been under intense scrutiny in recent times after a series of contracts awarded in reference to the Covid-19 pandemic raised questions on a scarcity of transparency and conflicts of interest between suppliers and politicians. About a 3rd of public spending goes on procurement. this totaled £329 billion in 2021-22.
A brand new exclusion regime should come into force early This 12 months, firms face a ban on tendering for public contracts in the event that they are found to have violated competition law.
“We imagine this system has real potential to generate billions of dollars in savings for the general public sector, but in addition obviously increases public sector productivity, which is a central a part of the agency's growth mission,” Cardell said.
The agency was given a particular remit by the last government to prioritize growth, but was criticized by Sir Keir Starmer's government over its provision of this metric.
The prime minister told a gathering of worldwide business leaders in October that he desired to “be sure that every regulator on this country, particularly our economic and competition regulators, takes growth as seriously as this space does.”
Cardell also defended the CMA's record, saying its strategic direction set out two years ago had “made clear that supporting productive and sustainable growth across the UK economy was a priority for the CMA”.
The regulator may even review using “conduct remedies” in merger decisions in 2025. Rather than forcing firms to divest, such remedies use other measures – akin to price freezes – to guard consumers.
