Rigged contracts costing UK taxpayers up to £3.5 billion a year
Key Points
- The CMA estimates bid rigging costs UK taxpayers £1 billion to £3.5 billion a year
- Rigged bidding can raise procurement prices by 20% or more, according to OECD-cited research
- The CMA's AI screening tool, BRIT, is in pilots but lacks the tender data it needs
- Spain, Portugal, Brazil and Korea already screen procurement data at scale
- The CMA wants bid rigging made a priority in the National Procurement Policy Statement
Firms colluding on public contracts are costing UK taxpayers between £1 billion and £3.5 billion every year, the Competition and Markets Authority (CMA) said on Tuesday (8 September).
The estimate appears in a new CMA report, Rigged Bids, Real Costs, which Chief Executive Sarah Cardell presented to MPs at a parliamentary event in the House of Commons.
Bid rigging happens when suppliers secretly agree how they will bid for a contract, so the buyer sees several competing offers when in reality there is only one.
“It creates the illusion of competition while covertly undermining it,” said Cardell.
The regulator based its figure on research cited by the OECD, which found that rigged bidding can push procurement prices up by 20% or more, applied to conservative assumptions about how common the practice is in the UK.
The UK government spends around £400 billion a year buying goods, services and infrastructure from private firms.
The CMA has completed seven bid-rigging cases since 2014 and imposed more than £129 million in fines, with over half of those cases involving public contracts.
Cardell said the damage went beyond money, pointing to evidence linking bid rigging to poorer quality and less innovation, including more road traffic accidents caused by substandard infrastructure and higher hospital mortality where budgets for essential medicines had been drained.
The AI tool that cannot get the data it needs
The CMA’s cartel enforcement and data science teams have built a system called the Bid Rigging Intelligence Tool (BRIT), which uses data analytics and AI to scan bidding patterns for signs of collusion.
BRIT is running in pilots with government departments and has already produced promising leads, the regulator said.
The tool needs large volumes of tender data to work properly, including the bids that lost, because collusion typically shows up in the relationship between winning and losing offers rather than in the winning bid alone.
The UK does not routinely collect that data, and where it does exist it is often not held in a machine-readable format, the CMA said.
Cardell said there had been no cross-government commitment to build an accessible, large-scale dataset of tender information, which puts the UK behind many other countries.
Competition authorities in Spain, Portugal, Brazil and Korea already run automated screening across national procurement data to hunt for suspicious bidding at scale.
Cartel investigations have historically depended on whistleblowers, complaints and chance discoveries, which is why the CMA regards data screening as a step change in what it can detect.
The report asks government to make preventing, detecting and deterring bid rigging an explicit priority in the new National Procurement Policy Statement, and to coordinate procurement data across the public sector so tools like BRIT can run on it.
The CMA said those two changes would bring the UK into line with leading international counterparts and unlock savings worth billions of pounds.
“That is desperately needed money, which goes directly from stretched departmental budgets into the pockets of colluding firms,” Cardell said.
The report was one of two the CMA published on Tuesday, alongside a wider paper on using public procurement to support industrial strategy, which drew on two years of work covering cloud computing, civil engineering, defence and the UK’s scale-up challenge.
