Just over a year after launching the Procurement Collusion Strike Force (“PCSF”), the U.S. Department of Justice’s Antitrust Division (“DOJ”) announced new measures to further its pursuit of antitrust and related crimes in government procurement, grant, and program funding.  These changes expand the PCSF’s enforcement capacity and signal DOJ’s enduring—and intensifying—commitment to the PCSF’s mission.

The PCSF has added 11 new national partners: the Department of Homeland Security Office of the Inspector General, the Air Force Office of Special Investigations, and nine new U.S. Attorneys.  As a result, the growing PCSF coalition now includes 29 agencies and offices, including U.S. Attorneys in 22 federal judicial districts; the Federal Bureau of Investigation; and Offices of Inspectors General at six federal agencies.  The PCSF also named the Antitrust Division’s Daniel Glad as the Strike Force’s first permanent director, solidifying the PCSF’s institutional role at DOJ.  Glad previously served as an Assistant Chief at the Antitrust Division’s Chicago Office.

These changes followed a productive year for the PCSF.  Since its formation, the PCSF has facilitated the opening of more than two dozen active grand jury investigations, covering a wide array of procurement collusion and fraud matters from defense and national security to public works projects.  The PCSF has focused on expanding the use of data analytics to detect suspicious bid patterns, sharing best practices on collusion analytics, and providing training on both the buy and sell side of government contracting.  The PCSF has also adapted to COVID-19, including the heightened collusion risks associated with exigent procurement by government agencies.  In March, Attorney General William Barr underscored this focus: “The Department of Justice stands ready to make sure that bad actors do not take advantage of emergency response efforts, healthcare providers, or the American people during this crucial time.”

It has long been the case that contractors bidding on new federal awards must formally certify that they have determined their prices independently, that that have not and will not share their prices with any other competitor prior to award, and that the contractor has not induced any other competitor “to submit or not to submit an offer for the purpose of restricting competition.”  But with the advent of the PCSF and the promise of even more scrutiny on the horizon, the number of procurement-related investigations is likely to continue to grow, increasing the importance of compliance and the need to avoid even the appearance of any violations of these procurement rules and the antitrust laws in the contracting space.

Penalties for illegal restraints on trade can be both criminal and civil.  Under § 1 of the Sherman Act, criminal repercussions may include incarceration of individuals for up to ten years and corporate fines up to $100 million or twice the gain/loss caused by the violation.  In addition to criminal penalties, the Antitrust Division has made it a policy to seek treble damages through civil antitrust actions to recover damages to the government.  Such conduct can also result in violation of other statutes, such as the civil False Claims Act, which provides for treble damages and fines.  And  what can be most devastating to a company, a conviction raises the specter of debarment from federal contracting, which can have far-reaching effects on government contractors.

Now is the time for government contractors to ensure that they have adequate safeguards in place to prevent, detect, and mitigate collusive or fraudulent procurement practices.  A great starting point is the Antitrust Division’s Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations (“ECCP”).  The ECCP discusses the criteria that the Antitrust Division considers when deciding whether, and to what extent, it will bring criminal charges against a company.  Under the ECCP, Antitrust Division prosecutors first consider:

  • whether the company’s antitrust compliance program addressed and prohibited criminal antitrust violations;
  • whether the compliance program detected and facilitated prompt reporting of the violation; and
  • the extent to which the company’s senior management participated in the violation.

Antitrust Division prosecutors then evaluate the effectiveness of the antitrust compliance program based on nine key factors:

  1.  the company’s culture of antitrust compliance;
  2. program design and comprehensiveness;
  3. responsibility for, and resources devoted to, antitrust compliance;
  4. antitrust risk assessment techniques;
  5. compliance training and communication to employees;
  6. monitoring and auditing techniques;
  7. reporting mechanisms;
  8. compliance incentives and discipline; and
  9. remediation methods.

The Antitrust Division also may consider the factors laid out in the DOJ Criminal Division’s Evaluation of Corporate Compliance Programs, such as whether the program is well designed; whether it is adequately resourced and applied in good faith; and whether it works in practice.

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Photo of Ross Demain Ross Demain

Ross Demain advises clients in complex antitrust matters, including mergers and acquisitions, joint ventures, and other transactions; government investigations; litigation; compliance; and trade association activities.

He has represented clients in civil and criminal investigations before the Department of Justice, Federal Trade Commission, and…

Ross Demain advises clients in complex antitrust matters, including mergers and acquisitions, joint ventures, and other transactions; government investigations; litigation; compliance; and trade association activities.

He has represented clients in civil and criminal investigations before the Department of Justice, Federal Trade Commission, and state antitrust enforcers, and in private antitrust litigation as both plaintiffs and defendants. Ross also regularly helps clients assess and comply with their premerger notification obligations under the Hart-Scott Rodino (HSR) Act.

Ross has significant experience helping clients achieve positive outcomes across a variety of industries and sectors, including technology, media, electronics, cable, broadcast, industrial products, energy and natural resources, defense, pharmaceuticals, medical devices, sports, and financial services.

Representative litigation victories in which Ross has been involved include:

  • obtaining dismissal of an antitrust claim in a precedent-setting case at the International Trade Commission (ITC) that confirmed that the antitrust injury requirement applies to claims brought under Section 337 (ITC 2018);
  • achieving one of the first dismissals of a corporate defendant on jurisdictional grounds in the sprawling, In re Automotive Parts Antitrust Litigation (E.D. Mich. 2013);
  • attaining dismissal of a purported class action antitrust suit brought by retired NFL players alleging a conspiracy to restrain a market for the sale of their images and likenesses, Washington v. National Football League (D. Minn. 2012); and
  • obtaining an early dismissal of novel resale price maintenance claims brought in federal court under New York’s Donnelly Act, Worldhomecenter.com, Inc. v. KWC America, Inc. (S.D.N.Y. 2011).
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Photo of Michael Pierce Michael Pierce

Michael Pierce is an associate in the firm’s Washington, DC office and a member of the firm’s Government Contracts Practice Group. He assists clients on a broad range of government contracting issues, with an emphasis on claims, disputes, and investigations.

Mike has an…

Michael Pierce is an associate in the firm’s Washington, DC office and a member of the firm’s Government Contracts Practice Group. He assists clients on a broad range of government contracting issues, with an emphasis on claims, disputes, and investigations.

Mike has an active investigations practice. He has represented numerous government contractors in responding to civil investigative demands and subpoenas, in addition to helping clients assess potential exposure prior to receipt of government demands. He routinely conducts investigations related to the False Claims Act, including counselling government contractors on its disclosure obligations and mitigation measures.

Mike also represents contractors in a variety of claims and disputes, including prime-subcontractor disputes and debarment actions brought by federal and state entities. He has successfully assisted clients in mitigating the effects of terminations for default, defending defective pricing claims, and arbitrating disputes related to complex teaming agreements. Mike has advised leading contractors on numerous high-stakes issues—including allegations of providing latently defective parts—in disputes with primes, subcontractors, and the government.

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Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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