Sinn Féin spokesperson on Public Expenditure and Reform, Mairéad Farrell TD, has called for Minister Michael McGrath to request that the Competition and Consumer Protection Commission (CCPC) investigate potential bid-rigging of public works contracts.
This comes in the wake of the revelations by Reuters that the Spanish Competition Authority has issued fines totalling over €200m to six major Spanish construction companies for colluding on bids for public contracts.
Five of these companies are heavily involved in Irish public-private partnership projects, particularly motorways.
Bid-rigging is a form of collusive behaviour by contractors to increase the price of a contract or to allow a pre-selected contractor to win a competition for building a school, hospital, homes, etc. It is a practice described by the Competition and Consumer Protection Commission (CCPC) as ‘a serious form of anti-competitive behaviour’.
Teachta Farrell said:
“Reuters has reported that these companies met on a weekly basis from 1992 to 2017 to discuss the projects they were planning to bid for, and to coordinate strategy.
“Given the significant involvement of these companies in Irish infrastructure projects, we have to question whether this practice was taking place here.
“This practice pushes up the prices for public works contracts, and given the large amount of spending which has been outlined in the National Development Plan (NDP), it poses significant fiscal risks.
“Since being elected I have consistently raised the issue of bid-rigging, and the impact it can have on contract price inflation, with Minister McGrath, the Irish Fiscal Advisory Council as well as the Finance Committee and Budgetary Oversight Committee.
“I raised it again recently with officials from the Department of Public Expenditure when I met with them to discuss Minister McGrath’s new Inflation Cooperation Framework.
“This framework will see the state bear up to 70% of the additional costs of capital works projects arising from the inflation of construction materials. And, given the concerns around price manipulation of bids for public works, I relayed my concerns that a similar anti-competitive practice might take place around material costs, which the taxpayer would then have to bear.
“Our Competition Authority has been pointing out since the 1990s that bid-rigging is a serious concern here. Back in the 1990s, it sought more powers to deal with this, which were granted.
“Its powers were also further enhanced in the last few years. But the difficulty for Ireland dealing with this is that the state’s characteristics make us particularly vulnerable to this practice.
“Characteristics like a limited number of alternative suppliers, high barriers to entry, opportunities for repeated interactions among competitors, active trade associations which can be used, either wittingly or unwittingly, to facilitate coordination amongst competing firms, and close connections between political parties and certain industries.
“I am now calling on Minister McGrath to request the Competition and Consumer Protection Commission (CCPC) to investigate this matter.”