On February 18, 2020, Washington Metropolitan Area Transit Authority (“WMATA”) Inspector General Geoffrey Cherrington announced that special agents from WMATA would be partnering with the Department of Justice’s Procurement Collusion Strike Force (“PCSF”) to prevent and detect fraud affecting WMATA.  The announcement portends a growing partnership amongst federal, state, and local entities in the procurement fraud space that could reverberate well beyond the Washington metro area.

The PCSF was announced by the Department of Justice on November 5, 2019.  Its stated purpose is to deter, detect, investigate, and prosecute antitrust crimes, including price fixing, bid rigging, market allocation, and labor market allocation/wage fixing.  Initially, the PCSF was formed as an interagency partnership between DOJ’s Antitrust Division, prosecutors from thirteen U.S. Attorney’s Offices, FBI investigators, the Department of Defense Office of the Inspector General, the U.S. Postal Service Office of Inspector General, and the General Services Administration Office of the Inspector General.  WMATA represents the first reported non-federal entity to join the coalition.

Although we cannot say for sure what the partnership will look like, one of the PCSF’s central missions is to train government officials at all levels of the procurement process to better recognize and avoid procurement fraud.  To that end, the PCSF has posted materials to its website that define various procurement offenses and provide red flags that can be used to expose fraudulent practices.  A key component of the partnership between the PCSF and WMATA likely will include working together to ensure that WMATA officers understand trends associated with procurement fraud and are prioritizing enforcement in this area.

The precise effect of the expanding coalition on state and local procurement fraud enforcement remains to be seen, but there are some conclusions that seem inevitable.  First, the increased training and availability of federal expertise to state and local agencies  will heighten the government’s enforcement emphasis on pursuing fraudulent practices and spur more investigations.  Second, the PCSF’s new streamlined online whistleblowing process—which can be found on the PCSF website—likely will lead to more whistleblowers, especially as the PCSF enforcement actions garner the attention of industry—and the public in general—going forward.

With the PCSF’s renewed emphasis on detection and enforcement, government contractors at all levels—federal, state, or local—have an extra incentive to strengthen their compliance programs dealing with procurement fraud.  This begins with contractors taking an active approach toward fully understanding their compliance obligations.  Once contractors understand their duties, they can institute strong compliance programs that include risk assessment techniques, comprehensive training programs, auditing programs, and effective compliance incentives and discipline.  Acknowledging that even the best compliance regimes do not achieve complete prevention, it is essential that contractors develop effective protocols for reporting and mitigating its own fraud.  Under the Antitrust Division’s Leniency Program, contractors that report their wrongdoing and cooperate in the Division’s investigation may be able to avoid criminal convictions, fines, and prison sentences altogether.

The PCSF and WMATA alliance will be a closely watched test case that should provide insights into the future of joint state and local procurement fraud enforcement.  What we know for certain is that the federal government is bringing its resources and expertise to bear on procurement fraud at all levels.  All contractors will face increased scrutiny and enhanced threat of enforcement, which may prove especially daunting for state and local contractors who are not accustomed to such intense scrutiny.  Government contractors would be wise to ensure that their procurement practices, compliance regimes, and reporting mechanisms are equipped for the oncoming scrutiny.

Tags: Antitrust, Bid Rigging, Department of Justice, internal investigation, Procurement Collusion Strike Force, Procurement Fraud, WMATA
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Photo of Michael Pierce Michael Pierce

Michael Pierce is an associate in the firm’s Washington, DC office and a member of the firm’s Government Contracts Practice Group. He assists clients on a broad range of government contracting issues, with an emphasis on claims, disputes, and investigations.

Mike has an…

Michael Pierce is an associate in the firm’s Washington, DC office and a member of the firm’s Government Contracts Practice Group. He assists clients on a broad range of government contracting issues, with an emphasis on claims, disputes, and investigations.

Mike has an active investigations practice. He has represented numerous government contractors in responding to civil investigative demands and subpoenas, in addition to helping clients assess potential exposure prior to receipt of government demands. He routinely conducts investigations related to the False Claims Act, including counselling government contractors on its disclosure obligations and mitigation measures.

Mike also represents contractors in a variety of claims and disputes, including prime-subcontractor disputes and debarment actions brought by federal and state entities. He has successfully assisted clients in mitigating the effects of terminations for default, defending defective pricing claims, and arbitrating disputes related to complex teaming agreements. Mike has advised leading contractors on numerous high-stakes issues—including allegations of providing latently defective parts—in disputes with primes, subcontractors, and the government.

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Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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