Government Contractors: 5 Takeaways from DOJ’s Remarks on First Year of Procurement Collusion Strike Force

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PilieroMazza PLLCIn November 2019, the U.S. Department of Justice (DOJ) announced the creation of the Procurement Collusion Strike Force (PCSF), an interagency partnership aimed at preventing and prosecuting anticompetitive behaviors in government procurements. The dual purposes of the PCSF are to (1) deter and prevent anticompetitive conduct in the procurement process through outreach and training to government and industry procurement personnel and (2) jointly investigate and prosecute procurement collusion and fraud by leveraging partnerships in the law enforcement and inspector general communities. The PCSF signifies the government’s high priority on preventing procurement fraud, and government contractors should develop a compliance program to protect against anticompetitive conduct. For more background on the PCSF, check out my previous blog post here.

After wrapping up the first year of the PCSF, DOJ issued remarks (see here and here) on successes over the course of the first year as well as priorities for the next year. Below are five key takeaways from DOJ’s remarks.

1. The PCSF has seen significant interest from government agencies and has experienced exponential growth

The PCSF started out with 6 to 8 member teams in 13 U.S. districts. According to DOJ, over the past year, many agencies have shown interest in collaborating with the PCSF, and it now has over 360 working partners from 46 agencies and offices at the federal, state, and local levels. In its second year, the PCSF will be adding nine new U.S. Attorney’s Offices, the Department of Homeland Security, Office of Inspector General, and the U.S. Air Force Office of Special Investigations to the interagency partnership.

2, The PCSF has provided antitrust training to thousands of procurement professionals

DOJ reports that the PCSF has trained more than 8,000 agents, investigators, and auditors, including over 1,000 state, county, and city procurement professionals. These trainings have focused on identifying and reporting “red flags” of collusion, including recognizing antitrust conspiracies, safeguarding the procurement process from collusion, and identifying anticompetitive bid patterns. As a result, government personnel involved at all stages of the procurement process are better able to identify and report potentially illegal practices, which the PCSF has then investigated.

3. The PCSF is focused on fraud related to COVID-19 relief spending

In light of the trillions of dollars the federal government is spending on COVID-19 relief, it is not surprising that the PCSF has taken an interest in preventing procurement fraud in this area. In this regard, the DOJ explains that the PCSF has created trainings for procurement and contract management personnel tasked with CARES Act spending, which are specifically focused on heightened risks of fraud and collusion presented by exigent procurement circumstances. The PCSF has also increased its outreach to agencies with oversight responsibility for CARES Act funding, including the Department of Labor, Office of Inspector General, Department of Health and Human Services, Office of Inspector General, the Pandemic Response Accountability Committee, and the Small Business Administration, Office of Inspector General. Government contractors who seek or have sought COVID-19 relief funding should give extra scrutiny to their practices to ensure they are not engaging in any potentially anticompetitive conduct, in light of the PCSF’s significant focus on these procurements.

4. Dozens of PCSF investigations are underway

In its remarks, DOJ notes that the PCSF has already opened over two dozen grand jury investigations involving alleged procurement collusion and fraud on defense, national security, and public works projects, both domestic and international. Notably, DOJ points out that a quarter of the investigations are located outside of the 13 PCSF districts, demonstrating that the PCSF is not limiting itself geographically.

5. The PCSF will continue aggressive investigations and enforcements in its second year

Finally, DOJ states that the PCSF intends to aggressively investigate cases involving price fixing, bid rigging, and market allocation, with a particular focus on COVID-19 related collusion schemes. As part of its aggressive enforcement action, the PCSF plans to use “the full range of criminal and civil tools available to the federal government, including the Clayton Act’s Section 4A authority to pursue treble damages, to hold accountable corporations and individuals that undermine competition in government spending.”

DOJ’s remarks show that the PCSF is of significant interest to government procurement personnel across the country, and combatting procurement fraud remains a high priority at all levels of government. In light of this ongoing enforcement effort, and the potential for extremely high penalties if improper behavior is discovered, government contractors need to understand problematic types of anticompetitive conduct and ensure they have a proper compliance program in place.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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