SOME of the biggest construction firms in Hampshire have been hit with multi-million-pound fines after illegally rigging contracts at the expense of the taxpayer.

The Office of Fair Trading (OFT) issued penalties to 103 UK companies worth a total of £129.5m after an investigation into bid-rigging in England, but warned that the practice had been “endemic” in the industry.

It said companies colluded with competitors on building contracts and this meant customers were at risk of being overcharged.

The biggest fine – £17.9m – went to Kier Group, which is building the new Ordnance Survey headquarters on Adanac Park on the edge of Southampton and is the owner of Southampton-based builder Brazier Construction.

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Meanwhile, Balfour Beatty was fined a total of £5.2m relating to the actions of its Totton-based subsidiary Mansell. It acquired the company when it bought its parent, Ringwood based Dean & Dyball, for £45m in March 2008.

Mansell was fined for its involvement in 17 offences.

Carillion has been asked to pay £5.4m due to contracts tendered by its subsidiary Mowlem, the company which built the Spinnaker Tower in Portsmouth, pictured, and has contracts with New Forest District Council and Southamptonbased Hyde Housing Association as well as Southampton University and Bournemouth & West Hampshire Water.

The OFT said most of the offences involved so-called cover pricing, where one or more bidders arranges for competitors to put down high bids. These bids are not to win the contract but are submitted as genuine and give a misleading impression to clients about the level of competition.

Firms were fined an average of £1.26m, or 1.14 per cent of global turnover, although this was substantially less than the maximum ten per cent fine available to the OFT.

The fines relate to 199 tenders between 2000 and 2006 but the OFT warned that its investigation suggested “that cover pricing was a widespread and endemic practice in the construction industry”.

Only one of the offences listed by the OFT occurred in Hampshire, during the bidding for the £4.95m Bedales School in Petersfield, with the majority in the north of the country.

The investigation was sparked in 2004 by a complaint from an NHS auditor in Nottingham, but it quickly spread to more than 4,000 tenders involving more than 1,000 companies.

The Local Government Association (LGA) expressed outrage at the construction firms, saying there were “simply no excuses for collusion or cover pricing, which leaves the public and councils to pick up the tab”.

A legal expert said councils had grounds to consider seeking redress, although the total amount overpaid has never been calculated.