Public sector procurement is a multi-billion-dollar sector. It makes a vital contribution to the Australian economy and the welfare of Australians, who have the right to expect competitive bidding for these projects, resulting in value for money,” says ACCC Chair, Ms Gina Cass-Gottlieb.
In November 2021, the ACCC issued a warning to public sector agencies to be alert to the potential of bid rigging for public sector tenders and report any collusive activity to the ACCC.
The ACCC has today launched civil proceedings in the Federal Court against ARM Architecture, alleging engagement in cartel conduct by attempting to rig bids for the tender for a building project. In 2018, Charles Darwin University announced plans for a new $250 million Education and Community Precinct in the heart of the Darwin CBD. The project is primarily funded by the Commonwealth Government and the university.
ARM Architecture was awarded the contract for principal design and consultant services under the first phase of the project after a tender in May 2019.
In September 2020, the tender for the second phase of the Charles Darwin University project was issued. It is alleged that following the issue of the tender, emails were sent to eight other architectural firms requesting them not to submit a bid for the second phase of the Charles Darwin University project.
The ACCC alleges that in doing so ARM Architecture, attempted to rig or induce other competitors to agree to rig the tender for principal design consultant services. The ACCC also alleges an attempt to induce other competitors to agree to rig this tender.
Once Charles Darwin University became aware of the alleged conduct, ARM Architecture was excluded from consideration for the second phase of the building project, which was valued at about $2.6 million plus GST.
“Bid rigging for tenders, whether the tenders take place in the public or private sector, is against the law. This type of cartel conduct increases the costs of tenders for businesses or taxpayers, and has a chilling effect on competition,” ACCC Chair Gina Cass-Gottlieb said.
“The ACCC will take appropriate enforcement action against this type of conduct, including potential civil or criminal cartel proceedings.”
“Professional services firms, including architects, should note that Australia’s cartel laws apply to their businesses as they do in other sectors. Firms competing in these markets must compete fairly and ensure they do not engage in anti-competitive behaviour, including cartel conduct.”
This year the ACCC has launched an outreach program aimed at engaging with public sector procurement officials regarding the risk and indicators of cartel conduct in procurement processes. The program forms part of the ACCC’s focus on strengthening a number of measures to drive proactive cartel detection. The ACCC has also developed a cartel screening tool for bid rigging conduct, which will better enable the ACCC to use data analysis techniques to identify potential investigation targets.
“We are continuing to engage with public sector procurement officials at the local, state and federal levels to increase their awareness of potential anti-competitive conduct in public sector contracting, to enable early detection of this conduct,” Ms Cass-Gottlieb said.
The ACCC is seeking declarations, pecuniary penalties and costs, as well as orders for compliance training.
The case will be listed before the Federal Court at a date to be set.
Notes to stakeholders
Bid rigging occurs when two or more competitors agree they will not compete genuinely with each other for tenders, allowing one of the cartel members to ‘win’ the tender. Participants in a bid rigging cartel may take turns to be the ‘winner’ by agreeing about the way they submit tenders, including some competitors agreeing not to tender.
More information on bid rigging can be found on the ACCC’s website at Bid rigging.
The ACCC investigates cartel conduct and takes civil cartel proceedings in the Federal Court. The ACCC works to detect cartels including through education programs, proactive intelligence gathering and data assessment and working with overseas counterparts to identify cartels that operate on a global level.
The ACCC also manages an immunity program that enables past or present cartel members to confess their actions and cooperate with investigations in exchange for immunity from ACCC-initiated civil and (through the CDPP) criminal proceedings.
Anyone with information about cartel conduct, including in the construction industry, is urged to call the ACCC Cartel Hotline on (02) 9230 3894. You can also report cartel conduct anonymously (link is external).
Public procurement officials who want to know more about detecting cartels are encouraged to contact the ACCC Cartel Outreach team at carteloutreach@accc.gov.au.
Anyone who thinks they may be involved in cartel conduct can also apply for immunity from prosecution in exchange for helping with the ACCC’s investigations by contacting the ACCC.
Background
ARM Architecture is an architectural firm with offices in Melbourne, Sydney and Adelaide.
The tender process for the Charles Darwin University Project was conducted in two parts. In the first phase, in May 2019, the university invited tenders for the provision of principal design consultant services for the master plan, business case, concept plan and scheme design phase of the project, and ARM Architecture was the successful tenderer.
In the second phase in September 2020, Charles Darwin University invited tenders for principal design consultant services for the design development, construction documentation, construction and defect liability period phases of the project.