We have reported relatively little about the blacklisting scandal that was uncovered following a raid by the Information Commissioner’s Office on an organisation that few had previously heard of and is now defunct called the Consulting Organisation, in 2009. This sort of issue does not strictly fall into the scope of what we normally define as ‘construction law’, but when it threatens to spill over into procurement it does.
In News (p 4) we mention a fairly damning report by the Parliamentary Scottish Affairs Committee into the use of blacklists by major contracting household names which raises the possibility of those who used blacklists being banned from public sector tendering. Compensation might have to be paid to people who suffered because of being blacklisted, and contractors could find themselves having to stump up for this.
The blacklists were apparently legal when the companies, which have admitted their involvement, started using them, but became illegal and in some cases continued to be used. This was only an interim report and the MPs intend to continue calling witnesses to their meetings to be questioned under oath before releasing a final report. Some who have already given evidence may be recalled, and the MPs say they are not convinced that all of those who gave evidence have told the whole truth.
Business Secretary Vince Cable has said that if it emerges that blacklists are still being used he will push for full investigation. It might well be that blacklists are still in use – by their nature they are secretive and furtive – and at least one senior contractor in evidence to the Committee seemed unsure what a blacklist is – he argued that since not everyone on the list was denied work it could not be viewed as a blacklist.
Construction is already viewed in some quarters as a hotbed of corruption, which the Office of Fair Trading’s largely fruitless investigation into alleged cartel activity a few years ago did much to heighten, even though the industry emerged with a fairly clean bill of health and few could now remember what exactly cover pricing is. Mud sticks however and the news of recent arrests for alleged cartel activity in the supply of products to the industry (see News) will probably heighten suspicions all over again.
Long term damage to construction looks likely from the blacklisting scandal. The banning of firms from public sector tender lists would be a severe blow even for those who derive most of their work from the private sector, and some clients there would not be too keen to employ them in that event either.
A major loser in the event of bans would also be the public sector itself, and by extension all of us, as the UK could ill afford to lose the presence of these major companies from tender lists. There may be poetic justice in the users of the blacklist being effectively blacklisted themselves, but let’s hope we don’t manage to shoot ourselves in the foot over this.
Nick Barrett
Editor