UK government grapples with bid-rigging risks as CMA trials AI tool

The UK government is facing increasing risks associated with bid-rigging by contractors, as warned by Sarah Cardell, the head of the Competition and Markets Authority (CMA).

This concern has emerged within the context of the nation’s public procurement market, which is valued at an estimated of more than £300bn annually. To address these challenges, the CMA is trialling an innovative artificial intelligence (AI)-driven tool specifically designed to detect collusion in bidding processes.

Cardell spoke with the Financial Times, detailing the capabilities of this trial program, which harnesses AI technology to thoroughly analyse large volumes of bidding data. 

The initial results of the program are proving encouraging. Cardell highlighted, “We know that procurement markets are at significant risk of bid-rigging,” and noted that the new system allows the CMA to scan data at scale, thereby improving the detection of discrepancies and preventing fraudulent practices.

Currently, the CMA is conducting the trial in partnership with one specific government department and has reported positive outcomes so far. 

This initiative comes at a time of intensified scrutiny regarding the integrity of government procurement, particularly following recent investigations into potentially suspicious activities. Notably, in December 2022, the CMA initiated an investigation into possible bid-rigging related to the 

Department for Education’s school improvement fund, which is critical for the upkeep of educational buildings. The CMA suspects collusion among some roofing and construction firms aimed at manipulating the bidding process.

This investigation is a continuation of the CMA’s proactive efforts to enhance fairness within the procurement system. 

In 2023, the agency took significant enforcement actions, imposing fines totalling nearly £60m on ten construction firms that were found guilty of rigging bids associated with demolition and asbestos removal contracts. These enforcement actions reflect a growing commitment to upholding fairness and transparency in the awarding of public contracts.

In recent years, the UK’s procurement system has come under heightened examination, particularly due to the controversial contracts awarded during the Covid-19 pandemic. Such contracts raised substantial concerns surrounding potential conflicts of interest and a lack of transparency within decision-making processes. 

With public procurement constituting approximately one-third of the total government expenditure—amounting to around £329bn in the fiscal year 2021-22—ensuring integrity within these processes remains a top priority for both the government and regulatory authorities.