DOJ Announces Procurement Collusion Strike Force to Combat Bid-Rigging and Other Collusion in Federal Contracting
On November 5, 2019, the U.S. Department of Justice (DOJ) announced the establishment of the Procurement Collusion Strike Force (PCSF), an interagency partnership aimed at preventing bid-rigging and other anti-competitive behavior related to the government procurement process. The PCSF is comprised of prosecutors from DOJ’s Antitrust Division, investigators from the Federal Bureau of Investigation (FBI) and Offices of the Inspectors General for multiple Federal agencies, and prosecutors from 13 U.S. Attorneys’ offices, including the offices of Byung Jin “BJay” Pak in the Northern District of Georgia and Zachary Terwilliger in the Eastern District of Virginia. [1]
In prepared remarks introducing the PCSF, Assistant Attorney General Makan Delrahim emphasized the large amount of federal funds allocated to government contracting and noted an “extensive history” of prosecuting criminal conduct related to public procurement. In fact, as AAG Delrahim stated, “more than one-third of the Antitrust Division’s 100-plus open investigations relate to public procurement or otherwise involve the government being victimized by criminal conduct.” In light of this continued focus, the PCSF will have two core objectives: “[t] to deter and prevent antitrust and related crimes on the front end of the procurement process through outreach and training” and “to effectively detect, investigate, and prosecute crimes that do occur through better coordination and partnership in the law enforcement and inspector general communities.” [2]
The PCSF looks to increase education efforts on the “buy-side” and “sell-side” of the procurement process by conducting outreach to federal, state, and local government procurement officials as well as to government contractors, their trade associations, and public contract lawyers regarding antitrust violations and associated penalties. This new outreach differs from the Antitrust Division’s previous efforts because it uses a “district-based task organization model, beginning in the 13 partner U.S. Attorneys’ Offices.” FBI Special Agents in each of the 13 participating districts will serve as “PCSF Liaisons,” aiding in the targeted outreach and training.
Additionally, the PCSF plans to facilitate coordination of agencies’ data analytics programs to better identify potential “red flags” of collusion. Such “red flags” include similarities between competing proposals (such as proposals containing similar handwriting, typographical or mathematical errors or proposals sent from the same mailing address, email address, or overnight courier account number) or indicators that vendors worked together, rather than competed for the award (such as a vendor submitting multiple proposals or making statements indicating knowledge of another competitor’s prices). PCSF will also maintain a public website featuring antitrust training materials, legal resources, and a citizen complaint form to help identify potential procurement-related misconduct. [3] Once such conduct is detected, joint investigation and prosecution by the relevant PCSF district team will follow.
The formation of the PCSF will enable DOJ and its partners to devote significant resources to investigate and prosecute illegal conduct and, as AAG Delrahim reiterated, “protect the integrity of the government procurement process by ensuring competition in this critical sector of our nation’s economy.” Government contractors, particularly those in the 13 partner districts and those who already rely on or are involved in federal government contracting work, should continue to educate themselves about and comply with the unique requirements and obligations at play when competing for federal awards and submitting bid proposals. Robust antitrust compliance programs, employee training, and codes of conduct will also remain important given that prosecutors evaluate such efforts when making charging decisions and sentencing recommendations. [4] Further, companies should consider conducting internal audits to detect issues of anti-competitive behavior for possible self-reporting in consideration of the Antitrust Division’s well-established amnesty program.
Troutman Sanders’ White Collar and Government Investigations practice has extensive experience advising companies and individuals on issues relating to public procurement. If you wish to discuss the PCSF or if you would like advice about your company’s current compliance efforts or potential enhancements to your existing policies, please contact one of our White Collar and Government Investigations team members.
[1] Other offices include the District of Columbia, the Northern District of Texas, the Central District of California, the Eastern District of California, the District of Colorado, the Southern District of Florida, the Northern District of Illinois, the Eastern District of Michigan, the Southern District of New York, the Southern District of Ohio, the Eastern District of Pennsylvania, the Inspector General of the Department of Justice, the Department of Defense Office of Inspector General, the U.S. Postal Service Office of Inspector General and the General Services Administration Office of Inspector General.
[2] https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-procurement-collusion-strike
[3] https://www.justice.gov/procurement-collusion-strike-force
[4] https://www.justice.gov/opa/pr/antitrust-division-announces-new-policy-incentivize-corporate-compliance