Cover Pricing

So the OFT has fined construction firms £129.5M for cover pricing.

Contrary to what was said on BBC Breakfast this morning, “cover pricing” is not telling other firms what your price is to enable them to price higher – that’s bid fixing or price rigging and is what record companies, banks and insurance companies and the like continue to do.

No, as “Building” magazine succinctly describes it:

“Cover pricing is when a firm tenders for a contract with a high price in order to avoid winning the job. The aim is to remain on the client’s future tender list while avoiding taking on work it does not have capacity for in the immediate term.”

So not as bad as everyone is making it out to be, surely?

Tony Bingham also sums it up quite nicely in an article he wrote here:

But of course the OFT and others need to be seen to be doing something, even if that means driving hard-pressed builders to the wall. One that someone else might have put a cover price in for…

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