Just over a year after launching the Procurement Collusion Strike Force (“PCSF”), the U.S. Department of Justice’s Antitrust Division (“DOJ”) announced new measures to further its pursuit of antitrust and related crimes in government procurement, grant, and program funding. These changes expand the PCSF’s enforcement capacity and signal DOJ’s enduring—and intensifying—commitment to the PCSF’s mission.
The PCSF has added 11 new national partners: the Department of Homeland Security Office of the Inspector General, the Air Force Office of Special Investigations, and nine new U.S. Attorneys. As a result, the growing PCSF coalition now includes 29 agencies and offices, including U.S. Attorneys in 22 federal judicial districts; the Federal Bureau of Investigation; and Offices of Inspectors General at six federal agencies. The PCSF also named the Antitrust Division’s Daniel Glad as the Strike Force’s first permanent director, solidifying the PCSF’s institutional role at DOJ. Glad previously served as an Assistant Chief at the Antitrust Division’s Chicago Office.
These changes followed a productive year for the PCSF. Since its formation, the PCSF has facilitated the opening of more than two dozen active grand jury investigations, covering a wide array of procurement collusion and fraud matters from defense and national security to public works projects. The PCSF has focused on expanding the use of data analytics to detect suspicious bid patterns, sharing best practices on collusion analytics, and providing training on both the buy and sell side of government contracting. The PCSF has also adapted to COVID-19, including the heightened collusion risks associated with exigent procurement by government agencies. In March, Attorney General William Barr underscored this focus: “The Department of Justice stands ready to make sure that bad actors do not take advantage of emergency response efforts, healthcare providers, or the American people during this crucial time.”
It has long been the case that contractors bidding on new federal awards must formally certify that they have determined their prices independently, that that have not and will not share their prices with any other competitor prior to award, and that the contractor has not induced any other competitor “to submit or not to submit an offer for the purpose of restricting competition.” But with the advent of the PCSF and the promise of even more scrutiny on the horizon, the number of procurement-related investigations is likely to continue to grow, increasing the importance of compliance and the need to avoid even the appearance of any violations of these procurement rules and the antitrust laws in the contracting space.
Penalties for illegal restraints on trade can be both criminal and civil. Under § 1 of the Sherman Act, criminal repercussions may include incarceration of individuals for up to ten years and corporate fines up to $100 million or twice the gain/loss caused by the violation. In addition to criminal penalties, the Antitrust Division has made it a policy to seek treble damages through civil antitrust actions to recover damages to the government. Such conduct can also result in violation of other statutes, such as the civil False Claims Act, which provides for treble damages and fines. And what can be most devastating to a company, a conviction raises the specter of debarment from federal contracting, which can have far-reaching effects on government contractors.
Now is the time for government contractors to ensure that they have adequate safeguards in place to prevent, detect, and mitigate collusive or fraudulent procurement practices. A great starting point is the Antitrust Division’s Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (“ECCP”). The ECCP discusses the criteria that the Antitrust Division considers when deciding whether, and to what extent, it will bring criminal charges against a company. Under the ECCP, Antitrust Division prosecutors first consider:
(a) whether the company’s antitrust compliance program addressed and prohibited criminal antitrust violations;
(b) whether the compliance program detected and facilitated prompt reporting of the violation; and
(c) the extent to which the company’s senior management participated in the violation.
Antitrust Division prosecutors then evaluate the effectiveness of the antitrust compliance program based on nine key factors:
(1) the company’s culture of antitrust compliance;
(2) program design and comprehensiveness;
(3) responsibility for, and resources devoted to, antitrust compliance;
(4) antitrust risk assessment techniques;
(5) compliance training and communication to employees;
(6) monitoring and auditing techniques;
(7) reporting mechanisms;
(8) compliance incentives and discipline; and
(9) remediation methods.
The Antitrust Division also may consider the factors laid out in the DOJ Criminal Division’s Evaluation of Corporate Compliance Programs, such as whether the program is well designed; whether it is adequately resourced and applied in good faith; and whether it works in practice.