The Procurement Collusion Strike Force: Will DOJ Intrude on the Procurement Process?

Author:Mr Kelly Kramer, Marcia G. Madsen, William H. Stallings, Stephen Medlock, David F. Dowd and Luke Levasseur
Profession:Mayer Brown

The Department of Justice (DOJ) announced last week that it had established a multi-agency Procurement Collusion Strike Force (PCSF) that would be focused on "deterring, detecting, investigating and prosecuting antitrust crimes, such as bid-rigging conspiracies and related fraudulent schemes, which undermine competition in government procurement, grant and program funding." This new "Strike Force" appears to reflect a shift in the DOJ Antitrust Division's (Division) enforcement priorities toward companies that collude and conspire in connection with government procurement (and other federally funded) opportunities.

The Strike Force

The PCSF is an interagency partnership consisting of prosecutors from the Division and 13 US Attorneys' Offices and investigators from the FBI and various Inspector Generals' (IG) offices. The PCSF has been tasked with detecting, deterring and prosecuting collusion and bid rigging as it relates to government procurements at the federal, state and local levels that involve federal funds (including grants).

In addition to investigating possible antitrust crimes, the PCSF also will conduct training and outreach for procurement officials and government contractors on antitrust risks in the procurement process. Based on the PCSF's newly launched website, training procurement officials to identify and investigate the "red flags of collusion" would appear to be one of the Strike Force's key missions. Such training could not only help protect government agencies from collusive bidding but also could serve as a pipeline of new cases for the Division.

In its press release announcing the Strike Force, the DOJ stressed that the Division had a "history of prosecuting criminal antitrust conspiracies" that targeted government contractors, citing its prosecution of several South Korean companies that rigged bids for fuel contracts with the Defense Department that resulted in civil and criminal penalties in excess of $350 million. The Division's success in prosecuting these cases would appear to have been one of the drivers behind the PCSF's creation, but other factors would appear to be at work as well, including the absence of significant cartel investigations and prosecutions in recent years. In fact, since the Division completed its sprawling auto parts investigation, its criminal docket has slowed dramatically.

Implications for Government Contractors

The high-profile rollout of the PCSF suggests that the Division...

To continue reading