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The UK government faces a “significant risk of bid-rigging” by contractors, the head of the competition regulator has warned.
Sarah Cardell, head of the Competition and Markets Authority, said the agency was trialling a new intelligence tool which it believed could help catch out companies when tendering for public contracts.
The pilot program, which uses AI to crunch big data, is part of an effort to reduce fraud and waste in the UK's 300bn-a-year public procurement market.
“We know that the buyout markets are very vulnerable to bids,” Cardell told the Financial Times. “We now have the ability to scan data at scale, bid data at a scale, spot anomalies in that bid data, and identify areas of anti-competitive behavior.”
A pilot program with another government department has been “very successful”, he said.
Last month the CMA announced new fraud investigation for suspicious activities in relation to the Department of Education's school improvement fund.
The agency says it has reason to suspect that several companies that provide roofing and construction services have colluded to hold bids for contracts with the fund, which is used to protect educational buildings.
In 2023, the CMA fined 10 construction firms nearly £60mn for rigging bids to win contracts for demolition and asbestos removal.
Public procurement has come under intense scrutiny in the UK in recent years after a number of contracts awarded in relation to the Covid-19 pandemic raised questions about lack of transparency and conflicts of interest between suppliers and politicians. Procurement accounts for a third of public expenditure, which reached £329bn by 2021-22.
New eviction regime set to work early this year it will mean that companies face being stopped from bidding on public contracts if they are found to have breached competition law.
“We think (the program) has real potential to drive billions in public fund savings, but it also improves public sector productivity, which is a key component back to the (agency's) growth objective,” Cardell said.
The agency was given some powers to prioritize growth by the last government, but has faced criticism from Sir Keir Starmer's administration over the delivery of the metric.
The prime minister told a gathering of world business leaders in October that he wanted to “ensure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this chamber does”.
Cardell also defended the CMA's record, saying its strategic direction set two years ago “has made it clear that supporting productive and sustainable growth across the UK economy is a priority for the CMA”.
The guard is is also set to review its use of “ethics” on the integration of regulations in 2025. Instead of forcing companies to go out of business, such remedies use other measures – such as price freezes – to protect consumers.