The federal competition watchdog has launched legal action against ARM Architecture and its former director alleging they “engaged in cartel conduct by attempting to rig bids” for a tender involving CDU’s new $250 million Darwin CBD campus project.

ARM Architecture, also known as Ashton Raggatt McDougall Pty Ltd with offices in Sydney, Melbourne and Adelaide, was awarded the contract for principal design and consultant services under the first phase of the project that went to tender in May 2019.

The Australian Competition and Consumer Commission alleges that in September 2020, as a tender for the second phase of the project was released, ARM’s managing director Anthony John Allen sent emails to eight other architectural firms “requesting them not to submit a bid for the second phase of the CDU project”.

The ACCC claims that amounted to attempting to rig or induce other competitors to agree to rig the tender for principal design consultation services.

“The ACCC also alleges that Mr Allen attempted to induce other competitors to agree to rig this tender,” the agency said in a statement.

ARM Architecture was excluded from consideration for the second phase of the project which had been valued at roughly $2.6 million, after CDU reportedly became aware of the alleged conduct.

It was unclear how CDU became aware of the alleged conduct.

According to court documents, Mr Allen wrote the following to another firm in September 2020 before later withdrawing it: “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”.

The ACCC said architecture firms were not above cartel laws.

“Bid rigging for tenders, whether the tenders take place in the public or private sector, is against the law,” ACCC Chair Gina Cass-Gottlieb said.

“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.”

The ACCC issued a warning to public sector agencies to be alert to potential bid rigging for public sector tenders and to report collusion to the agency last November.

CDU city campus already controversial

The CDU city campus is part of the federal City Deals program which will see the project paid for by the Commonwealth and CDU. The deal required CDU to take out a $151.5 million loan from the Northern Australia Infrastructure Facility, which some experts have said the university cannot afford after already cutting positions to save funds.

“This project is a boost for the Northern Territory construction industry, but it may well reduce CDU’s capacity to spend on teaching and research. As a result of longstanding financial pressures, CDU has already sacked 77 staff and scrapped courses,” wrote Geoff Hanmer, Honorary Professional Fellow, Faculty of Design, Architecture and Building, with the University of Technology Sydney last year.

Concerns had also been raised that one of the walls of the building in an early proposed design would reflect heat into the city, against the NT Government’s measures to cool the CBD.

But designs have changed repeatedly for the project that is expected to be completed in early 2024.

The ACCC is seeking declarations, pecuniary penalties and costs, as well as orders for compliance training, against ARM Architecture it said.

ARM Architecture said in a statement on Friday that the action taken against it by the ACCC will not “affect the delivery of our projects”.

“As this matter is before the court, it is not appropriate for us to comment further at this time, other than to assure our clients and partners this matter will not affect the delivery of our projects,” a spokesman said.