John Durie: ACCC launches civil action against architectural firm over alleged bid rigging

The Australian Competition and Consumer Commission (ACCC) has stepped up its war against bid rigging with a civil cartel case against national architects Ashton Raggatt McDougall (ARM) for allegedly trying to fix a bid for Charles Darwin University in 2020.

The ACCC included the firm’s former boss Tony John Allen in the action. A hearing date is yet to be set.

The case is part of a series of actions taken by the regulator against alleged bid rigging, including one involving maintenance work on Canberra’s national gallery last year and the Sydney University roof tile case in which a $420,000 fine was imposed in September. 

In a statement last November the ACCC said “based on recent experiences, the ACCC is concerned that some public servants and businesses may not be sufficiently aware of the risk of breaching cartel laws during the procurement process”.

“Public sector procurement is a multibillion-dollar sector which makes a vital contribution to the Australian economy and the welfare of Australian citizens and residents,” it added.

The launch of the civil action is notable because the ACCC has had a mixed record in taking criminal cartel cases.

This year, the only defendant in the Vietnamese money exchange case who challenged the charges escaped when the charges were withdrawn.   

The Charles Darwin University case centres on a $250 million upgrade in which a second tender was announced in September 2020. ARM is accused of contacting eight other national firms telling them to stay out of the bid.

ARM won the tender for the first stage of the project and was the only bidder for stage two of the project, which was worth $2.6 million.

The firm was part of a loose alliance called the Ambassador Group comprised of large practice architects.

The group was facilitated by the Australian Institute of Architects, and provided a forum for large architectural practices to meet and discuss issues relevant to their industry.  

Other members of the group included Architectus Australia Pty Ltd, John Wardle Pty Ltd, Denton Corker Marshall Pty Ltd, Cox Architecture Pty Ltd, Bates Smart Architects Pty Ltd, Hassell Limited and Woods Bagot.

ARM complained the Darwin University’s two stage tender was “disgrace” and as “contempt for the profession and to us in particular”. 

The firm knew of the two-stage process before entering and winning the first.

It allegedly told the other firms the separate tender process was “because there is a very complex tri-partite funding arrangement involving the federal, territory and local governments, and the University is bound by terms in this funding agreement that require two tender processes for the project. Something to do with so-called ‘best value for money’.”

ARM allegedly said to the other firms: “Our request to you is simple. Please do not submit a tender as we are relying very heavily on continuing with this project to keep our practice alive throughout the remainder of this strange and difficult COVID-19 time.”

In a statement on Friday, ACCC chief Gina Cass-Gottlieb made it clear that “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”.

“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,” she added. 

“The program forms part of the ACCC’s focus on strengthening a number of measures to drive proactive cartel detection including  a cartel screening tool for bid rigging conduct, which will better enable the ACCC to use data analysis techniques to identify potential investigation targets.”