I teach a module in an electrical engineering MSc programme in the UK for which the students are given a technical project that carries 25% of the total marks. The project is a group assignment and the students work in teams of 3-4 members.
This year, four out of six teams submitted identical assignments (the only differences were their names on the cover page).
In our school, we are expected to flag cases of suspected plagiarism and collusion to an internal academic offences committee. If I do that, the most likely scenario is that they will all get a zero mark in this assignment.
My main concern is that if this happens, the module will have a very high failure rate. These students will need to score at least 75% in the final exam and taking into account their progress hitherto (which has been disappointingly poor), it is more likely for a camel to... pass the module.
Moreover, I expect that the committee will rule that all students get a zero - both the ones who copied the answers, and the one(s) who provided them. At least this was the case last year when a similar case of collusion was taken to the academic offences committee. I'm not sure this is fair to those students who spend time and effort to do the assignment.
Some months ago I had a chat with a colleague, who suggested that there's a cultural aspect to the students' understanding of the concepts of collusion and plagiarism - an opinion that I also found in this blog post by TurnitIn and this paper that is cited therein. I'm mentioning this because the students who colluded in my class are all international. Although I'm not convinced by the idea that they may simply not understand that copying an other team's assignment is wrong (they are MSc students after all), I can acknowledge that I may be missing something. I should mention that at the beginning of the semester, there was a series of induction events in which we tried to define very clearly the concepts of plagiarism and collusion.
An additional complication is that high failure rates are frowned upon in our department. It's an unwritten rule that the ideal failure rate is 0% and I'm already feeling pressure from the other modules I teach where I get ~15% failures every year. This is also a new module and I don't want it to have a bad reputation.
My question is: should I should report them to the academic offences committee given that they will fail my module and as a result the MSc? If so, they will have the right to resit the final exam in October, but they'll still need to score >75%. My other option is to turn a blind eye (in principle we do that for minor infractions), but I don't think this is right. Besides, it may give them the message that they'll pass the final exam even if they don't put in any effort. I do not have the option to give them some other punishment without referring them to the committee.
Update: Many thanks for your answers. Today I reported this to the academic offences committee. I presented all the evidence to the committee, but I will not participate in the investigation, which I believe is fair. I think the university has unequivocally communicated its regulations regarding academic offences, so as @Allure wrote dura lex sed lex. In my opinion it is both partonising and condescending to suggest that international students should be treated differently or more leniently and even that they cannot understand what collusion is; they have the right to chose to collude and should face the consequences. I do have some concerns about the severity of the consequences, but as it stands, these are the rules. Lastly - and this is a more philosophical question that has nothing to do with blatant verbatim copying - I wonder whether there is indeed a significant difference "across cultures," but this is a different topic altogether.