[co-author: Colin Brady]
On September 14, 2023, Daniel W. Glad — Director of the Procurement Collusion Strike Force (“Strike Force”) for the Department of Justice’s (“DOJ”) Antitrust Division — gave remarks as the keynote speaker for the Virginia Bar Association’s Annual White-Collar Fall Forum, emphasizing a renewed commitment to pursuing criminal investigations in the federal procurement arena. DOJ announced the creation of the Strike Force in November 2019 as an interagency partnership aimed at deterring and eliminating anticompetitive collusion, waste, and abuse of the government procurement process. Mr. Glad highlighted in detail the volume of government spending in Virginia last year, including amounts in excess of $4 billion for federally funded government contracts in the next several years. The Strike Force is tracking those investments across the country and soliciting leads for investigations as part of its mission “to root out [an] increased risk of anticompetitive collusion.”
The context driving the Strike Force’s enforcement is important. In recent years, Congress has enacted several large spending packages — including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act of 2022, and the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 — that will inject trillions of dollars into the U.S. economy. And the Justice Department recognizes the risk for abuse that is inherent with large-scale federal spending. As Mr. Glad put it, “[t]he spending represents a generational chance for growth and improvement. It could also be, if not properly secured, a generational chance for collusive and fraudulent schemes to flourish.”
DOJ is committed to leveraging the full spectrum of investigative techniques and agency partnerships. To date, the Strike Force has opened more than 100 investigations, prosecuted more than 60 companies and individuals, and obtained more than 45 guilty pleas and trial convictions. Mr. Glad noted last year’s efforts to expand the Strike Force with the addition of four new agency inspectors general — the Department of Energy, Department of Transportation, Department of Interior and the Environmental Protection Agency — and more recent efforts to bolster investigative methods to identify criminal conduct. He noted an increased use of wiretaps, undercover agents, data analysis, and human source development as reasons for the Strike Force’s recent successes.
The Strike Force is focused on going above and beyond civil and administrative penalties to deter misconduct. Mr. Glad remarked, “until companies truly reform [their] corporate culture and commit to [] compliance,” he sees a great risk of corporate prosecution in the future. He also emphasized that administrative penalties such as suspension, debarment and penalties are insufficient and will not shield contractors from criminal liability. With an express reference to “big companies,” Mr. Glad signaled that corporate resolutions in the government contracts space will align more closely with recent enforcement efforts by the Antitrust Division in the generic drug industry. Criminal monetary penalties recently secured by DOJ against generic drug companies were the largest in history for the prosecution of domestic antitrust crimes and included, for the first time, business-line divestiture. The Strike Force is looking to increase the scope and severity of penalties in an effort to promote corporate accountability and respect for the law.
With a mandate of aggressive enforcement, compliance is the guiding principle. Although the Strike Force has been in existence since November 2019, there has recently been a marked rise in enforcement activity and a substantial investment of government resources to solicit leads and investigate potential misconduct. Robust and comprehensive compliance programs have never been more critical for government contractors regardless of size and contract value. DOJ is proactively monitoring contract awards across industries and imposing high standards of accountability for small businesses and well-established companies alike. Risk-based, tailored policies and procedures are essential in the current regulatory environment, and contractors should not wait for a new contract award to implement or update their policies. Companies should heed DOJ’s warning and carefully evaluate key risk areas — such as teaming arrangements, joint ventures, and employment contracts — to identify practices that could be construed as negatively impacting competition.
