This mornings news of price rigging in public sector construction contracts comes as no surprise, and I would imagine that the cases of compensation payments and cover pricing are just the tip of the iceberg.
Cover pricing is the practice where many bidders deliberately structure a high priced losing bid in order to facilitate another bidder to make a lower priced bid that leaves them with a comfortable profit. A case of you scratch my back and I'll scratch yours, and probably not limited to the construction business.
A particular case that comes to mind is the difference in costs between two village halls built near Masterley Mansions. In the late 1990's the village a few miles to the north decided that they needed a new village hall to replace the scout hut size building they had used for years. They started a fund and very quickly raised over £250,000, an impressive feat and equally impressive was the brick building they built with a 100 foot hall, plus a stage, meeting rooms and a fully fitted kitchen. Picture below left, but perhaps a little deceptive bcause the full length of the hall is not apparent.
A few years later the good people of the village a few miles to the south decided that they also needed a new village hall, but instead of building a freestanding hall they would connect it to the village school, and add a few classrooms to the school, pictured right. Rather than brick, this was to be mostly pine wood construction, a smaller hall, no stage, a refurbished kitchen and a few new classrooms. 10% of the cost was met by local people because it is a church school, but the rest of the bill was picked up by the tax payer. The picture on the right shows part of the school, but the hall is not visible, although the wooden construction is clear.
The cost after the extensive bid process managed by a government appointed architect: £2,000,000.