Will DOJ's Heightened Focus on Government Procurement Antitrust Crimes Result in Increased Prosecutions?
Since we last reported on the Department of Justice's (DOJ) newly-formed Procurement Collusion Strike Force (PCSF), the Antitrust Division (Division) has publicly underscored its commitment to cracking down on bid-rigging in government procurement, reporting that more than one-third of the Division's open criminal antitrust investigations relate to government contracts or alleged crimes against the government. Although it is still too early to tell whether the task force will lead to a substantial increase in enforcement actions against government contractors, the Division's continued emphasis on the procurement process combined with its request for increased funding for fiscal year 2021 for criminal enforcement suggests that government contractors remain in the Division's crosshairs.
In November 2019, DOJ announced the new multi-agency task force charged with identifying, investigating, and prosecuting antitrust crimes in the government procurement process. The PCSF signaled the Division's attempt to revive prosecutions of antitrust crimes in the face of a several-year downturn. However, it was not clear that the task force, with a modest budget of less than $1M in new funding in 2019, would have the teeth to back its mission.
Over the past few months, the Division has publicly touted the progress the task force has made in investigating antitrust crimes in government procurement. In recent remarks, the Division's Deputy Assistant Attorney General (DAAG) responsible for criminal enforcement, Richard A. Powers, stated that the task force is "already off to a strong start," with more than one-third of the Division's open criminal antitrust investigations relating to the government procurement process or other government investigations. The Division also reports that as of the close of fiscal year 2019, it has had the highest number of criminal antitrust investigations open – 102 – since 2010. Furthermore, nearly 30 federal, state, and local agencies have requested training and collaboration with the task force.
The Division also has prioritized the task force in its fiscal year 2021 budget request. Indeed, the Division has sought an increase of $8.2M over last year's budget to hire dozens of new attorneys, in part to address its increased criminal enforcement workload. While it is unclear how much of that funding, if approved, would be devoted to staffing investigations into bid-rigging in the procurement process, it is noteworthy that the budget request highlights the PCSF's mission as one of its top criminal enforcement priorities.
But will the Antitrust Division's public statements translate into meaningful prosecutions? Only time will tell. The Division has already publicly attributed one indictment to the task force: charges against a Missouri man for rigging bids submitted to the General Services Administration (GSA) for surplus government equipment in the U.S. While the Division characterizes these charges as the third in an ongoing bid-rigging investigation, the two earlier guilty pleas predated creation of the task force. It remains to be seen whether the open criminal antitrust investigations into government procurement bid-rigging that the Division touts will result in an increase in enforcement actions against government contractors, and whether those actions will extend beyond individuals to large companies or to conduct outside the U.S.
The Antitrust Division's heightened focus on the PCSF means that contractors should remain vigilant. The PCSF could investigate activity related to any federally funded awards from traditional Federal Acquisition Regulation (FAR)-based procurements, to federal grants, and even alternative acquisition instruments such as Other Transaction Authority awards. As we previously cautioned, contractors should review and be mindful of the PCSF's "red flags" throughout the procurement process. As a result, government contractors should take time now to update internal compliance and reporting programs and implement procedures to diligently identify any collusion "red flags" to avoid or mitigate the impact of an investigation or enforcement action. Contractors should also reexamine their antitrust and procurement-focused compliance programs to ensure they are they have the teeth to effectively prevent and detect antitrust violations.
We will continue to monitor the task force for any developments and to assess risk for our current and potential contractor clients.
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