Bid-rigging is rife in Australian construction, but the process itself is partly to blame
The Court ordered ARM Architecture to pay a penalty of $900,000 and Mr Allen to pay $75,000.
- The Court ordered ARM Architecture to pay a penalty of $900,000 and Mr Allen to pay $75,000.
- I have lost my position, my reputation, and my involvement in a profession that I love.
- He had followed it up with this second email:
We have received very positive responses from Architectus and JWA. - We would greatly appreciate a short note from you to let us know of your intentions either way.`
The biggest fine for architects so far
- Although colluding in bidding for contracts is rife in the construction industry and materials supply industries, this is the biggest fine so far for an individual professional services firm.
- In Australia, the Australian Competition and Consumer Commission managed to successfully prosecute Cement Australia Pty Ltd in 2017 for anti-competitive practices resulting in a fine of $20.6 million.
Fees used to be fixed
- The Royal Institute of British Architects, founded in 1834, was set up primarily as a cartel to maintain a schedule of fees and prescribe educational standards for those who wanted to use the term “architect”.
- Although fixed fees are likely to upset economists on principle, they have the advantage of not encouraging architects to shortcut their professional responsibilities in order to compete on price.
- This might be why the law allows medical professionals, lawyers and pharmacists to set fees for their services.
Bidding processes convoluted
- This two-stage process, devised by a project management firm, was self-defeating.
- Charles Darwin University wanted a highly-awarded architect to deliver an iconic building, but much of the design ARM contributed has been lost.
Maybe there’s a better way
- It ought to be possible for the client to nominate a reasonable fee, and then select consultants who will accept the nominated fee based purely on their merit.
- Free-market economists might like to think about how much competitive tenders actually cost.