The proposed exclusion from public sector contracts of construction companies found guilty of bid-rigging and collusion by the Competition Commission would make the government’s R844.5 billion infrastructure expenditure programme “unworkable”, Aveng chief executive Roger Jardine said yesterday.
Jardine said the Office of Fair Trading in the UK, after a similar investigation, issued a practice note stating that no company after paying fines should be disqualified from bidding for work and “even that act in itself was anti-competitive and instead measures should be put in place to ensure it doesn’t happen again”.
He believed that the banning of firms was “a blunt policy instrument that will have far-reaching, unintended consequences because it will debilitate this country and its infrastructure development plans”. As such, it would “have a direct impact on employment creation, skills development and creating major infrastructure for economic growth”.
“There is much that turns on the infrastructure roll-out and I sincerely hope that this proposal will not find traction in public policy,” he said.
The commission is expected to conclude its fast-track settlement process by the end of this year, but it has not yet announced any settlement agreements with any construction companies.
Jardine’s comments were prompted by a Business Report article in July that quoted Construction Industry Development Board (CIDB) chief executive Ursula Ntsubane as stating that once the commission pronounced on the outcome of its investigation, the CIDB had an obligation in terms of its code of conduct to remove firms on its database from its grading system.
Ntsubane said this requirement would preclude these companies from public sector contracts because companies required a CIDB grading to bid for public sector work.
Phumza Macanda, a Treasury spokeswoman, confirmed then that contractors could be restricted from doing business with the government for a maximum period of 10 years for various reasons, ranging from fraud, corruption and abuse of supply chain management systems to poor performance.
The commission said last year that all of the top five listed construction companies had been implicated in anti-competitive practices during its probe into 65 bid-rigging cases in the sector, involving more than 70 projects valued at R29bn.
Jardine confirmed yesterday that Aveng had been in talks with the commission and had made a settlement proposal that the commission was now considering. He said Aveng had made a provision for a possible settlement this year.
“The Aveng group is ready to move forward. We are aware that industries of this nature are susceptible to forms of unethical behaviour and corruption and it’s something we are working to stamp out… So I trust that this proposal will be withdrawn and the industry and public sector can move forward together.” page 17