Council Defends Barrow Demolition Contract After Firm Was Fined in Bid-Rigging Case
Westmorland and Furness Council has defended its decision to award the demolition contract for The Forum and Market Hall in Barrow to a company that was fined as part of a major bid-rigging investigation.
DSM Demolition Ltd has been appointed to carry out the demolition work at the Barrow site. Which has been closed because of safety concerns. Questions have since been raised because DSM was one of 10 construction firms fined by the Competition and Markets Authority after an investigation into illegal cartel activity in the demolition sector.
The CMA fined the 10 firms a total of £59,334,957 in March 2023 after finding they had colluded when bidding for demolition and asbestos removal contracts. DSM’s fine was £1.4 million. The watchdog said the unlawful conduct took place between January 2013 and June 2018 and affected 19 contracts worth more than £150 million.
Westmorland and Furness Council said the Barrow contract was awarded through a “robust, lawful, open and competitive procurement process” and said the CMA case did not, on its own, raise concerns about DSM’s current ability to do the work.
What happened in the bid rigging case?
The CMA investigation focused on a practice known as “cover bidding”.
This is when companies appear to compete for a contract, but one or more firms submit bids that are designed to lose. That can make the tender look competitive when it is not.
According to the CMA, the firms involved agreed to submit bids that were deliberately priced to lose. In some cases, companies also agreed compensation payments. Where the winning firm would pay the losing firm. Some of these payments were hidden using false invoices.
The CMA said cover bidding can lead to customers paying higher prices, receiving poorer service or facing slower delivery. In public sector work, that can mean taxpayers lose out because the contract may not reflect true competition.
The affected contracts were not in Barrow. The CMA said the illegal activity related to demolition projects in London, the South East and the Midlands. Including sites linked to Bow Street Magistrates’ Court, Selfridges, the Metropolitan Police training centre in Hendon, Oxford University and Coventry University.
Why has this caused concern in Barrow?
The concern is not that the Barrow contract itself has been found to be improper. The issue is that a company previously fined for bid rigging has now been awarded a public contract in the town.
For local residents, the concern is easy to understand. The Forum and Market Hall are important town centre buildings, and their future has already attracted strong public interest. Any major demolition contract paid for or overseen by a public body is likely to face close scrutiny.
The fact DSM was named in a major CMA case raises questions about public confidence, procurement checks and how councils decide whether past conduct should affect future contract awards.
Council says checks were carried out
The Council said it carried out appropriate due diligence during the tender process.
The council said financial, technical and compliance checks were completed. And that DSM was not required to declare the CMA matter under the rules of the tender process. It also said the CMA matter could not be treated as a material reason to exclude the company or mark down its tender.
A council statement said the decision was made by choosing the tender that best matched the criteria for what it described as an “extensive and complicated project”.
The authority also said DSM is listed on an approved national procurement framework. Available to central and local government and the NHS. It added that the company has carried out major projects for other local authorities and continues to deliver specialist demolition work for the public sector.
What is happening at The Forum and Market Hall?
The Forum and Market Hall in Barrow have been closed because of safety concerns. The demolition contract is part of the next stage in dealing with the site.
The buildings have played a major role in Barrow town centre for many years, so the decision to demolish them is significant. It also comes at a time when town centre regeneration, public spending and the future of key community spaces are all under close local attention.
The demolition work is expected to be a complex job because of the location and the nature of the buildings. The council said this was one of the reasons a specialist contractor was required.
Public money and oversight
The council has said strict contract management and oversight arrangements are in place to protect public funds. It also said project controls will be applied throughout the demolition work.
This will be important for public confidence. While the CMA case was historic and related to other contracts, the scale of the fine means many residents will want reassurance that the Barrow project is being closely monitored.
The key questions now are likely to be around transparency, cost control and whether the demolition is delivered safely, on time and in line with the contract.
Why the issue matters
Bid rigging is taken seriously because it damages trust in public and private contracts. When companies agree between themselves who should win, the customer may believe they are getting a fair market price when they are not.
The CMA said the construction sector is important to the country’s economy and warned that illegal cartel behaviour can weaken competition and keep prices up for businesses and taxpayers.
In Barrow, the council’s position is that the past CMA case does not affect DSM’s current technical competence or ability to demolish The Forum and Market Hall.
However, the award has still raised understandable questions. The demolition of a major town centre site is already a high-profile project, and the involvement of a company previously fined for bid rigging means the council’s handling of the contract is likely to remain under scrutiny.
