On November 5, the Department of Justice (DOJ) sent a message to which everyone in the government contracting, federal grant and program funding worlds should pay attention. The DOJ announced the creation of a "Procurement Collusion Strike Force" dedicated to "deterring, detecting, investigating and prosecuting" bid-rigging conspiracies and other antitrust and related crimes not only in government procurement, but in other federally funded programs as well. The Strike Force, which will involve DOJ prosecutors from the Antitrust Division and 13 U.S. Attorney Offices, FBI investigators and representatives of several Offices of Inspector General, including DOD, DOJ and GSA (as well as employees of other federal government agencies), will focus significant new attention on criminal procurement misconduct.
Interest by antitrust authorities in government contracting is not new. The DOJ has regularly investigated and brought charges against companies selling goods or services to the government that have rigged bids or allocated markets, and culpable executives of those companies have spent time in jail for their involvement in these activities. In the past year, for instance, the DOJ announced bid rigging charges against South Korean companies that supplied fuel to two DOD agencies. Makan Delrahim, Assistant Attorney General of the DOJ's Antitrust Division, stated in his remarks announcing creation of the Strike Force that "more than one third of the Antitrust Division's 100-plus open investigations relate to public procurement or otherwise involve the government being victimized by criminal conduct."
The DOJ's interest in federal grant and program funding is also a continuation of a trend in increased scrutiny and enforcement in these areas, which rival federal procurement in dollars spent. Such programs include federally funded, but state or locally administered projects such as transportation and infrastructure development. DOJ's announcement does not exclude the possibility of investigations into other federally funded programs as well.
The DOJ's announcement not only puts government contractors and federal funding recipients on notice that their activities might be under increased scrutiny, it seeks to promote compliance through more than just the threat of potential prosecutions. According to Mr. Delrahim, the DOJ intends to conduct outreach to the government contracting community to educate participants about criminal antitrust violations and their consequences. The DOJ hopes by doing so to help companies identify and avoid potentially illegal conduct, while at the same time creating strong compliance incentives by bringing charges against companies and employees who do not respond as the DOJ hopes to its strong enforcement message.