A Few Thoughts On DOJ's Procurement Collusion Strike Force

This month, and with great fanfare, the U.S. Department of Justice (DOJ) announced its creation of a Procurement Collusion Strike Force. We know what you're thinking, and no - this Strike Force will not be starring in the next Avengers movie. Rather, DOJ created the Strike Force to combat antitrust crimes in Federal procurement.

The concept of a Strike Force is not novel. In October 2006, DOJ announced the formation of a then-new National Procurement Fraud Task Force within its Criminal Division, an effort that claimed credit for a large number of investigations and prosecutions in the ensuing years. The Central District of California established its own Procurement Fraud Task Force in 1991, focusing on alleged fraud in the defense industry. And there have been others. The idea behind all of them is to marshal federal enforcement resources from various agencies to focus on a single problem. In this case, the perceived problem is collusion among government contractors in violation of U.S. antitrust and procurement laws.

This article sets out our thoughts on the sort of contractor activities that could create a perception of collusion, and offers a few concrete actions you can take to make yourself less of a target for the new Strike Force (and the opportunistic plaintiffs' lawyers that will follow closely behind).

What are they looking for?

According to DOJ, the Strike Force — made up of prosecutors and OIG agents from various federal offices and agencies — will focus on "deterring, detecting, investigating and prosecuting antitrust crimes, such as bid-rigging conspiracies and related fraudulent schemes . . . ." The Strike Force describes these activities collectively as "procurement collusion."

DOD describes "collusion" as "bidders secretly agreeing to submit complementary high bids to allow preselected contractors to win," and/or suppliers and contractors agreeing "to prohibit or limit competition and manipulate prices to increase the amount of business available to each participant." In our experience, most companies do not intentionally rig bids, but rather often are accused of engaging in "anticompetitive behavior" that, while quite common in the commercial sector, garners the interest of overzealous prosecutors and agents in the public procurement arena. Some examples we've seen previously involve going to market through resellers/distributors, large businesses partnering with small businesses, and submitting multiple bids in response...

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