November 11, 2019
On November 5, 2019, the U.S. Department of Justice announced the creation of the Procurement Collusion Strike Force to combat antitrust violations and other crimes affecting government purchasing and programs at the federal, state, and local levels.
Assistant Attorney General Makan Delrahim, head of the Antitrust Division, explained that the new Strike Force will have dedicated prosecutors from the Antitrust Division and U.S. Attorneys’ Offices, personnel from Inspector General offices (including the Department of Defense and the General Services Administration), and FBI special agents assigned to 13 districts located in the District of Columbia and eleven states. AAG Delrahim said these Strike Force teams will be tasked with investigating and prosecuting suspected procurement misconduct using a variety of federal laws, including antitrust, False Claims Act, and other statutes governing fraudulent behavior in the procurement process.
As part of this effort, the Strike Force is training U.S. Attorneys’ Offices, Inspector General offices, and state and local government procurement officials about indicia of potential collusion during the procurement process. The Strike Force also intends to train government contractors and trade associations to raise awareness of the potential penalties for criminal and civil antitrust violations—including significant fines for corporations and imprisonment for individuals. The Strike Force is also soliciting whistleblower complaints about potential procurement violations through a new web-based reporting system and plans to invest in improved data analytics to detect potential irregularities in government procurement data.
The Strike Force builds on DOJ’s successful deployment of strike forces in the past targeting specific enforcement priorities. The Health Care Fraud Strike Force, for example, has been in operation for more than a decade and resulted in charges against more than 4,200 defendants involved in nearly $19 billion in Medicare program billings. More recent initiatives have focused on elder fraud and organized crime. These strike forces have generally proven successful in concentrating federal enforcement resources on a high priority issue, thereby creating pressure for prosecutors to deliver cases. As a result, we expect to see substantially increased enforcement activity around government procurement over the next 12 to 18 months.
We expect the new Strike Force to be an enforcement priority given the Antitrust Division’s increasing activity in government procurement over the past year. At present, more than one-third of the Antitrust Division’s 100-plus open grand jury investigations involve public procurement or conduct that included the government among its potential victims. And when these cases result in criminal resolutions, DOJ has been aggressive in leveraging the False Claims Act and other federal laws to secure additional damages for alleged harm to government agencies. In two recent cases involving military fuel contracts and generic pharmaceuticals, DOJ obtained civil damages for harm to government agencies that dwarfed the criminal fines imposed for the underlying antitrust violation. We expect this approach to be replicated by the Strike Force teams and, when a criminal conviction is obtained, offenders may face debarment as well as substantial fines and damages.
Companies involved in government procurement should use this opportunity to revisit their antitrust policies and training programs to mitigate any legal risks that result from DOJ’s increased enforcement efforts.
Gibson Dunn will be hosting a webcast on Wednesday, December 4th at 12:00pm EST to discuss the Procurement Collusion Strike Force in more detail, including (i) the risk factors and red flags in competitive bids that may attract attention from the new Strike Force teams and (ii) proactive steps that in-house counsel should be taking now to prepare for DOJ’s increased enforcement efforts.
To register, please click here: https://gibsondunnevents.webex.com/mw3300/mywebex/default.do?siteurl=gibsondunnevents
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Antitrust and Competition, False Claims Act or Government Contracts practice groups, or any of the following authors:
Kristen C. Limarzi – Washington, D.C. (+1 202-887-3518, [email protected])
Scott D. Hammond – Washington, D.C. (+1 202-887-3684, [email protected])
Rachel S. Brass – San Francisco (+1 415-393-8293, [email protected])
Jeremy Robison – Washington, D.C. (+1 202-955-8518, [email protected])
Chris Wilson – Washington, D.C. (+1 202-955-8520, [email protected])
Jonathan M. Phillips – Washington, D.C. (+1 202-887-3546, [email protected])
Joseph D. West – Washington, D.C. (+1 202-955-8658, [email protected])
Lindsay M. Paulin – Washington, D.C. (+1 202-887-3701, [email protected])
Please also feel free to contact any of the following practice group members:
Antitrust and Competition Group:
D. Jarrett Arp (+1 202-955-8678, [email protected])
Adam Di Vincenzo (+1 202-887-3704, [email protected])
Scott D. Hammond (+1 202-887-3684, [email protected])
Kristen C. Limarzi (+1 202-887-3518, [email protected])
Joshua Lipton (+1 202-955-8226, [email protected])
Richard G. Parker (+1 202-955-8503, [email protected])
Cynthia Richman (+1 202-955-8234, [email protected])
Jeremy Robison (+1 202-955-8518, [email protected])
Chris Wilson (+1 202-955-8520, [email protected])
Daniel G. Swanson (+1 213-229-7430, [email protected])
Samuel G. Liversidge (+1 213-229-7420, [email protected])
Jay P. Srinivasan (+1 213-229-7296, [email protected])
Rod J. Stone (+1 213-229-7256, [email protected])
Veronica S. Lewis (+1 214-698-3320, [email protected])
Mike Raiff (+1 214-698-3350, [email protected])
Brian Robison (+1 214-698-3370, [email protected])
Robert C. Walters (+1 214-698-3114, [email protected])
Peter Alexiadis (+32 2 554 7200, [email protected])
Jens-Olrik Murach (+32 2 554 7240, [email protected])
Christian Riis-Madsen (+32 2 554 72 05, [email protected])
Lena Sandberg (+32 2 554 72 60, [email protected])
David Wood (+32 2 554 7210, [email protected])
Patrick Doris (+44 20 7071 4276, [email protected])
Charles Falconer (+44 20 7071 4270, [email protected])
Ali Nikpay (+44 20 7071 4273, [email protected])
Philip Rocher (+44 20 7071 4202, [email protected])
Deirdre Taylor (+44 20 7071 4274, [email protected])
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