10 Construction Firms Involved in Contract Bid Rigging
The Competition and Markets Authority has provisionally found that ten construction companies have been involved in “illegal cartel agreements” when...
Read Full ArticleA survey report on fraud in the construction industry reveals the most common experiences and negative impacts on businesses in the UK.
Data collected from the Fraud in the Construction Industry - Survey Report shows that a quarter of UK construction companies have experienced fraudulent activity over the last year. The common experience of fraud takes the form of changing the quality of materials, which has affected three in five companies surveyed.
A third of firms have fallen victim to invoice fraud, and one in every five companies have been affected by falsified expense reimbursements, false billing, contractors lying about qualifications, purchase fraud or stealing tools for other projects.
Although a quarter of these companies have experienced fraud in the last year, two in five didn’t report it to the police.
"The substitution, removal, or simple exaggeration of materials used on a project is becoming a frequent type of construction fraud. Contractors, subcontractors and tradesmen may utilise a particular grade or brand of material, or a specific piece of equipment, only to replace it with a less expensive one and keep the difference."
–Declan Rate
CEO and Partner, Forensic Procurement Partnership Ltd
A fifth of the 39 companies surveyed had also encountered bid rigging, bribery or another form of corruption.
Bid rigging can also take the form of cover bidding, where firms agree to submit bids that were deliberately priced to lose the tender, resulting in customers paying higher prices or receiving lower quality services. This was the case in June 2022, when the Competition and Markets Authority discovered that ten construction companies have been involved in “illegal cartel agreements” when submitting bids.
They provisionally concluded that the firms colluded on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts worth over £150 million, involving demolition work at the Met Police Training College, Selfridges and Oxford University, amongst others.
Declan Rate, CEO and Partner at Forensic Procurement Partnership Ltd, defined some of the other most common forms of fraud in the construction industry:
“The construction industry has always been vulnerable to the threat of fraud and cybercrime, particularly account diversion. This is where a company receives a notification of a change of bank account email purporting to be from a legitimate construction company, when in fact, it is from someone attempting to defraud them.
“Due to the current economic crisis, fraudsters are taking more desperate measures. The substitution, removal, or simple exaggeration of materials used on a project is becoming a frequent type of construction fraud. Contractors, subcontractors and tradesmen may utilise a particular grade or brand of material, or a specific piece of equipment, only to replace it with a less expensive one and keep the difference.
“We recommend “taking 5” prior to answering any emails or entering into any transaction to ensure it’s a genuine transaction. Lack of vetting and screening could potentially cause long-term financial and reputational harm. We’d also suggest doing your due diligence when hiring anyone on a project. Check work history, and confirm qualifications and certifications. Ask yourself: Can you perform more background checks? Do they have recent references you can request?”
For practical advice and victim support, contact Action Fraud, the UK’s national reporting centre for fraud and cyber crime.
Picture: a photograph of a construction worker wearing a protective hard hat on a building site. The person is kneeling. Image Credit: Unsplash
Article written by Ella Tansley | Published 27 July 2022
The Competition and Markets Authority has provisionally found that ten construction companies have been involved in “illegal cartel agreements” when...
Read Full ArticleA corrupt NHS official who accepted bribes of £80,000 in exchange for awarding lucrative IT contracts has been jailed for three years at Guildford Crown...
Read Full ArticleOrganisations are striving to reduce their carbon footprint, and with food waste topping waste streams, the reduction and prevention of food waste should be a priority...
Read Full ArticleLorcan Mekitarian, Chair of the Cleaning & Hygiene Suppliers Association, outlines how in the midst of economic uncertainty, FMs must look for CHSA accreditation when...
Read Full ArticleAlex Minett from CHAS, the supply chain risk management company, looks at seven issues that will affect supply chains in 2023. The last year has been challenging...
Read Full ArticleMPs are recommending a series of measures to prepare the UK for future public health emergencies, resulting from an inquiry into the role of cleaning during the COVID-19...
Read Full Article30 UK businesses have spent £250 million procuring services and products from social enterprises and helped create 2,700 jobs in an ongoing programme from Social...
Read Full ArticlePlanet Mark, the sustainability certification, has created a series of free toolkits to help any size of business start on their sustainability...
Read Full ArticleCompass Group UK & Ireland has acquired Equinoxe Solutions, which will sit within Foodbuy, Compass’ procurement business. Equinoxe Solutions, based in Essex,...
Read Full ArticleThe success of FM services is all in the mobilisation phase, where the partnership between the service provider and customer sets the tone for the future, says Densrienne...
Read Full Article