The Australian Competition and Consumer Commission has launched civil proceedings against ARM Architecture and its former managing director Anthony (Tony) John Allen for alleged “cartel conduct”.
The competition watchdog alleges the practice attempted to “rig bids for the tender for a building project at Darwin’s Charles Darwin University.”
The $250 million project to create an education and community precinct in Darwin CBD was a central component of the Darwin City Deal, funded by the Australian and Northern Territory governments and the City of Darwin.
ARM Architecture was awarded the contract for principal design services for phase one of the project in May 2019. A tender for second phase principal design services, valued at $2.6 million, was issued in September 2020.
ACCC alleges that former managing director Tony Allen sent emails to would-be competitors requesting them not to submit tenders for the second phase.
Initial court documents submitted by the ACCC reveal that Allen sent emails to Architectus, John Wardle Architects, Denton Corker Marshall, Cox Architecture, Bates Smart, Hassell, Lyons and Woods Bagot.
The email allegedly stated:
“The only reason the remaining phases are being tendered separately is because there is a very complex tri-partite funding arrangement involving the federal, territory and local governments, and the University is bound by terms in this funding agreement that require 2 tender processes for the project. Something to do with so called ‘best value for money’. Most of the CDU people with whom we have been dealing were surprised to learn that this was occurring.
“Our request to you is simple. Please do not submit a tender as we are relying very heavily on continuing with this project to keep our practice alive throughout the remainder of this strange and difficult COVID time. Perhaps this is an issue that we could discuss at a future [Australian Institute of Architects’ Large Practice Forum] meeting.”
The document states that Architectus and John Wardle Architects responded by email confirming that they would not submit tenders.
“Allen received a phone call from a representative of DCM, in which that representative said that DCM was not intending to tender, but noting that the First Allen email may be seen to be collusion,” the document continued.
Capital Insight, project management consultancy on the CBD campus project, then emailed ARM Architecture requesting it to retract its initial email, which the practice did.
ARM Architecture submitted its tender on 5 November 2020. On 9 December, Charles Darwin University issued a letter to ARM Architecture stating that the practice will be excluded from consideration because of the initial email sent by Allen, which was considered to be “anti-competitive conduct, unethical conduct and prima facie evidence of conduct which may constitute collusive tendering.”
The ACCC alleges the conduct contravened section 45AJ of the Competition and Consumer Act of 2010.
“ARM Architecture, through the conduct of Mr Allen, attempted to rig or induce other competitors to agree to rig the tender for principal design consultant services. The ACCC also alleges that Mr Allen attempted to induce other competitors to agree to rig this tender,” ACCC said.
“Cartel conduct is one of the most serious violations of competition law, and attempts to engage in cartel conduct in public procurement have the potential to cause significant detriment to governments, taxpayers, consumers and businesses,” it continued.
A spokesperson from ARM Architecture told ArchitectureAU, “For over twelve months, we have provided our full cooperation to an ACCC investigation into correspondence sent by our former managing director.
“The ACCC has concluded its investigation and decided to commence a civil enforcement proceeding. The ACCC’s claims relate to an isolated incident and in response, we have implemented management and governance changes and enhanced compliance measures.
“As this matter is now before the court, it’s not appropriate for us to comment further about the ACCC’s allegations.”
In November 2021, the ACCC warned public sector agencies to be on the look out for potential bid rigging behaviour in tender processes.
Gina Cass-Gottlieb, ACCC chair, said, “Bid rigging for tenders, whether the tenders take place in the public or private sector, is against the law. This type of cartel conduct increases the costs of tenders for businesses or taxpayers, and has a chilling effect on competition.
“The ACCC will take appropriate enforcement action against this type of conduct, including potential civil or criminal cartel proceedings.
“Professional services firms, including architects, should note that Australia’s cartel laws apply to their businesses as they do in other sectors. Firms competing in these markets must compete fairly and ensure they do not engage in anti-competitive behaviour, including cartel conduct.
“Public sector procurement is a multi-billion-dollar sector. It makes a vital contribution to the Australian economy and the welfare of Australians, who have the right to expect competitive bidding for these projects, resulting in value for money.”
The case will be heard before the Federal Court, Victoria registry, with a hearing date still to be set.
