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Urban planning

Now that it’s official, government must crack down on bid rigging

Competition Commission’s findings on tenders for building renovation should act as a wake-up call to the industry and the authorities

PUBLISHED : Sunday, 29 May, 2016, 10:51pm
UPDATED : Sunday, 29 May, 2016, 10:51pm

Credit goes to the Competition Commission for taking on bid rigging in building maintenance, an issue of growing concern within the community. Although the commission’s study merely confirms what has long been suspected, it is nonetheless a good start to tackle the problem. The public now awaits further actions to rectify the situation.

In the commission’s first study since its establishment in 2013, the watchdog found suspicious bids after screening hundreds of building maintenance projects. Some 65 per cent of the bids were found to be unusually low; consultants associated with contractors were also more likely to win the bid. The results of the analyses were consistent with the widely held belief that bid manipulation was common practice in the market, it said.

Bid rigging revealed in renovation work for Hong Kong residential buildings

The findings are not a surprise. But it does give an idea of the scale of the problem. Property owners’ ignorance and indifference often give rise to abuse during the tender process, with contractors colluding with consultants, management companies and leaders of owners’ corporations to inflate project prices. The case involving the payment of HK$44 million in bribes to win a HK$260 million renovation tender at a Sha Tin residential site last year was just the tip of the iceberg.

The watchdog was being cautious when it said it had yet to find any proof of irregularities, saying the suspicious bids were made before the competition law came into effect late last year. But the message is clear. If similar cases are brought forward from now on, the watchdog will probe further. It also urged whistle-blowers to come forward. This is a de facto ultimatum to industry players that such practices will no longer be tolerated.

With tens of thousands of old buildings in need of renovation, the market is enormous. The HK$3.5 billion maintenance subsidy scheme provided by the government gives unscrupulous contractors an even bigger incentive to bend the rules. While the policy is well-intentioned, officials appear to be remiss about the malpractices arising from the scheme.

It’s time to comply, Hong Kong competition watchdog tells city’s trade and professional groups

Now that the watchdog has taken the first step to take on bid rigging, the government can no longer turn a blind eye to such corruption. The public will not be satisfied until the problem is rectified. It is good that the watchdog is taking the lead in fighting a long-standing problem, with more education and publicity campaigns to be launched later. Hopefully, self restraint will follow. If the situation continues unabated, the watchdog should not hesitate to show its teeth.