DOJ Launches Interagency Antitrust Procurement “Strike Force”

November 18, 2019

On Nov. 5, 2019, the Department of Justice Antitrust Division — in coordination with 13 U.S. Attorney’s offices, the FBI, the Defense Criminal Investigative Service and multiple Inspectors General — announced the formation of an interagency antitrust procurement Strike Force, with the specific intent of deterring, detecting, investigating and prosecuting bid-rigging conspiracies and related fraudulent schemes undermining competition in government procurement, grant and program funding. The Antitrust Division has launched a website describing the Strike Force and posted Assistant Attorney General Makan Delrahim’s speech announcing the formation of the Strike Force.

Even prior to this announcement, DOJ has emphasized that it intends to enforce antitrust laws in the government procurement space. The Strike Force builds upon recent DOJ enforcement actions, including the settlement of criminal and civil antitrust violations and False Claims Act claims against five South Korean companies related to bid rigging on Department of Defense oil supply contracts, and other settlements and ongoing investigations related to collusion in online bidding. (For details on these actions, see DOJ press releases here, here and here.)

The Antitrust Division has identified four red flags of collusion it considers important to its review of procurement matters, using the acronym “MAPS”:

  • MARKET for the award (e.g., few or a small group of vendors control the market for the award, or where the good or service is standardized)
  • APPLICATIONS or proposals that share similarities (e.g., including the same typographical or mathematical errors or being sent from the same email address)
  • PATTERNS developed among competing vendors (e.g., rotation of similar awards across multiple vendors, subcontracts among a group of competitors)
  • SUSPICIOUS BEHAVIOR evidencing collusion (e.g., vendors submitting proposals that lack the ability to provide the requested goods/services, a vendor bringing to discussions multiple proposals, or other evidence of pre-proposal knowledge of pricing)

While it remains to be seen what specific conduct will be sufficient for DOJ and its interagency partners to open an investigation into suspected collusion in the context of government procurements, it nonetheless seems clear that DOJ believes there is significant money to be saved by taxpayers — or recovered by DOJ — in pursuing antitrust violations in government procurement.

Any company contracting with the federal government should prepare for potential DOJ investigations and actions in this space and ensure that personnel responsible for bidding and procurement work have received antitrust training. Considering the significant recent announcement that the Antitrust Division will now give credit for compliance programs at the charging stage of an antitrust investigation (see McGuireWoods’ July 16, 2019, legal alert discussing this policy change), companies may also want to conduct a review of their compliance approach to ensure they fulfill the DOJ’s vision of a strong compliance program. This may include engaging counsel to update antitrust compliance policies and procedures, provide live e-training to business development and operational personnel, and analyze risks associated with any procurements identified as containing “red flags” under the MAPS factors. Early detection of potential antitrust violations may qualify a company to avoid dramatic criminal penalties under the Antitrust Division’s Leniency Program, which is available only for the first competitor to self-report anticompetitive activity.

To learn how McGuireWoods can assist clients in this area, read about the firm’s Antitrust, Government Investigations, and Government Contract Investigations and Enforcement teams.

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