The UK government faces a “significant risk of bid-rigging” by contractors, the head of the competition regulator has warned. 

Sarah Cardell, head of the Competition and Markets Authority, said the agency was trialling a new artificial intelligence-backed tool it believes may help catch companies that collude when bidding for public contracts. 

The trial programme, which uses AI to scrape large-scale data, is part of an attempt to reduce fraud and waste in the UK’s £300bn-a-year public procurement market.

“We know that procurement markets are at significant risk of bid-rigging,” Cardell told the Financial Times. “We’ve now got the capability to be able to scan data at scale, bidding data at scale, to spot anomalies in that bidding data, and to identify areas of potential anti-competitive conduct.” 

The pilot programme with one government department was “proving quite successful”, she said.

Last month the CMA announced a new bid-rigging probe over suspicious activity in relation to the Department for Education’s school improvement fund.

The agency said it had reason to suspect several companies providing roofing and construction services colluded to rig bids to secure contracts through the fund, which is used to protect educational buildings.

In 2023, the CMA fined 10 construction firms nearly £60mn for rigging bids to win demolition and asbestos removal contracts.

Public procurement has come under intense scrutiny in the UK in recent years after a number of contracts awarded in relation to the Covid-19 pandemic raised questions about a lack of transparency and conflicts of interest between suppliers and politicians. Procurement accounts for about a third of public spending, which totalled £329bn in 2021-22.

A new debarment regime set to come into force early this year will mean companies face being banned from bidding on public contracts if they are found to have broken competition law.

“We think it’s [the programme] got a real potential to drive billions of savings for the public purse, but also obviously enhancing public sector productivity, which is a core component back into the [agency’s] growth mission,” said Cardell. 

The agency was given a specific mandate to prioritise growth by the last government, but has faced criticism from Sir Keir Starmer’s administration over its delivery of the metric.

The prime minister told a gathering of global business leaders in October that he wanted to “make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does”.

Cardell also defended the CMA’s record, saying its strategic direction set out two years ago “made clear that supporting productive and sustainable growth across the whole of the UK economy was a priority for the CMA”.

The watchdog is also set to review its use of “behavioural remedies” in merger rulings in 2025. Instead of forcing companies to divest businesses, such remedies use other measures — such as price freezes — to protect consumers.