Company behind new schools 'price-fixing'

8:49am Wednesday 14th May 2008

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The construction giant chosen to rebuild six of the borough's primary schools has been accused by the Government of price-fixing.

Multi-million pound firm Kier was at the heart of an investigation by the Office of Fair Trading (OFT) last month that alleged widespread "cartel activity" in the construction industry.

Last week Barnet Council named the firm as a strategic partner in the £48 million building project in the first wave of its Primary School Investment Programme (PSCIP).

Kier was among 112 companies accused of rigging prices when bidding for contracts, by negotiating with other firms to agree artificially high bids.

The practice, known as covering, allows a company that wants the work to secure a highly-paid contract, without being undercut by cheaper rivals.

Barnet Council was in advanced negotiations with Kier when the OFT revealed the allegations, but a spokesman insisted the council had taken steps to ensure it got the best price.

He said: "We selected Kier after a rigorous and transparent process. All the companies who competed for the contract signed agreements with the council pledging they would not collude with each other.

"None of the companies were told their competitors and they had to demonstrate all the costs quoted were at the market rate. These were then tested to ensure this was the case and ensure best value for money."

The council was satisfied Kier offered the most economically viable scheme and would build lasting, quality schools, he added.

Kier has not been found guilty of any wrong-doing but the investigation is ongoing.

The company has played down the OFT's allegations, saying the investigation related to just three tenders in a five-year period in which the company bid for 11,000 contracts.

A spokesman said: "Kier has high ethical standards and allegations such as this run contrary to our culture and values.

"A high proportion of our workload comprises repeat business from long-standing clients. These enduring relationships have been built on our culture of openness, honesty and integrity."

John Fingleton, chief executive of the OFT, explained that cartel activity of the type alleged harmed the economy by distorting competition and keeping prices artificially high.

"Businesses have no excuses for not knowing and abiding by the law," he said.

Construction on the first school to be rebuilt, Whitings Hill Primary School, on Whitings Road, Barnet, is due to begin this summer.