So, the OFT has announced who鈥檚 being fined what for cover pricing and bid-rigging. But what was it like to be one of the firms involved? The finance director of a contractor that was fined told us his story, on condition of anonymity

I just can鈥檛 see how the way the Office of Fair Trading dealt with this situation was right. Cover pricing has been used by companies all over the country for tens of years. Nobody in the construction industry even knew that it was illegal until 2005. This is when the OFT took the case to lawyers and we all had seminars and meetings with legal advisers who filled us in on the details.

What then happened was that the OFT鈥檚 case was backdated to 2000, before many decent building firms 鈥� who stopped the practice after those meetings in 2005 鈥� knew the full picture. I know ignorance is no defence here 鈥� it certainly isn鈥檛 as far as the OFT is concerned 鈥� but I don鈥檛 think that鈥檚 fair. They have now been given carte blanche to penalise people who were not aware they were doing anything wrong.

In our case, we were found to have participated in cover pricing on three contracts out of 300. There would have been three reasons for doing this 鈥� if we didn鈥檛 have the resources to do the job, if we didn鈥檛 have the skills base to do the job or if we were initially lied to and told three or four people were going for the job, only to find out the number was nearer 10. When that happens and you realise you only have a one in 10 chance of winning 鈥� you often think, what鈥檚 the point? It costs a lot of money and takes up a lot of resources to put in a fully contracted price, so in these instances we would just ring up other people going for the job, ask what their bid was and put a higher price in.

When you realise you only have a one in 10 chance of winning we would just ring up other people going for the job, ask what their bid was and put a higher price in

Now, I don鈥檛 think this creates anti-competitiveness. It鈥檚 just using a mechanism to avoid winning a contract. I know there are some firms on the list who fully colluded and that is a different kettle of fish. It鈥檚 not cover pricing, it鈥檚 fraud, and the people who have been caught doing it totally and utterly deserve to be hauled over hot coals.

My other gripe is that the OFT knew it didn鈥檛 have the resources to find evidence to prove firms all over the country were cover pricing so they targeted northern England and the Midlands. How is that fair? One hundred businesses in one part of the country have had their reputations smeared and the rest have not. People must realise it goes on all over the place and there are companies who are much guiltier than us who have got away with it. And this will now give them an advantage. They鈥檒l be able to say: 鈥淒on鈥檛 use Fred Bloggs & Co 鈥� it was fined by the OFT. We weren鈥檛.鈥�

What the OFT should have done, as soon as it was decided that cover pricing was illegal, was warn everyone that in 12-18 months it would be doing spot checks and raids and that any company found cover pricing or bid-rigging would be severely fined. I think that would have pretty much stopped it dead.

Some firms on the list fully colluded and that is a different kettle of fish. it鈥檚 fraud, and the people who have been caught deserve to be hauled over hot coals

For us, the legal fees and time spent on dealing with this issue have been massive. It鈥檚 been a nightmare. The legal costs have been almost as much as the fine, which I expect will be the same for most of the smaller firms on the list.

After you found out that you鈥檇 been targeted by the OFT you had two options: to plead guilty and ask for leniency or stick to your guns and risk paying double. We applied for this leniency, which was the best option for us, I think. We worked openly with the OFT, understood how the fine would work and decided to try to reduce it in the first instance. It would be very difficult for us to appeal the fine now 鈥� so we won鈥檛.

I just think it鈥檚 immoral that the OFT has had been free to shaft everyone on that list and we have been left with no real way of defending ourselves. We now have an even worse reputation than we did before for being a bent, scamming industry and it鈥檚 just not true.

The view from outside contracting

Michael Thirkettle, chief executive of QS McBains Cooper

Would I work with any contractors on the Office of Fair Trading鈥檚 list? Well, I think there is more to be taken into account than just the fact they ended up being named and shamed. There is a back story to each of the cases and I think a kneejerk reaction, such as a vow never to work with any of these firms again, could be dangerous and detrimental.

There are lots of issues to think about here and I鈥檓 not sure the blame lies entirely with the contractors. For example, clients employ people to find out whether contractors have the staff and resources to be a genuine contender for their job before they invite them to bid for it. I鈥檇 also say that I am not sure the OFT鈥檚 investigation is as detailed as it could be or whether it has been conducted in the best way. I鈥檇 like to see evidence that cover pricing really did have a negative effect on clients鈥� prices.

Although I don鈥檛 disagree that the industry should stop this practice, as yet I鈥檓 not convinced it made too much of a difference in every case and I would say that鈥檚 what people really want to know.

Martin Burton, director of M&E specialist HW Sladden

I would guess the Office of Fair Trading鈥檚 decision will make clients think twice about their tender lists and whether they should widen their market, or maybe even cut it back so they鈥檙e working with people they know well.

But for us, it won鈥檛 make much difference which contractors we work with 鈥� with the state of the marketplace at the moment, we can鈥檛 be too choosy. If the contractors have three years to pay the fines, they should be able to budget for it without it affecting their ability to pay subcontractors. Generally, principal contractors are stretching their payment periods anyway; some treat subcontractors as an extra line of credit, and that鈥檚 not what we鈥檙e here for.

I presume cover pricing has gone on, but it鈥檚 not something we鈥檝e ever been involved with. In terms of whether it will damage the reputation of the industry 鈥� I don鈥檛 know whether people will look at it from that point of view. The industry鈥檚 bad reputation is mainly attached the cowboy builder who does domestic jobs.

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