More antitrust probes of government procurement likely, thanks to new task force

Attorneys focused on the government procurement market warned vendors that the new Procurement Collusion Strike Force faces a steep learning curve.

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The Procurement Collusion Strike Force, set up by the Justice Department last November, is designed to educate vendors and procurement officials about bid-rigging and prosecute offences. Attorneys for vendors are warning that efforts by the new group to police bid-rigging and other antitrust violations in government procurement could get off to a rocky start.

"There is a steep learning curve in the first few years," for these types of dedicated strike forces, David Douglass, partner in international law firm Sheppard Mullin's government contracts, investigations and international trade practice group, said during a Jan. 8 Coalition for Government Procurement webinar on the strike force.

Nonetheless, Douglass and his colleagues said they expect to see an increase in procurement investigations in the coming months.

The strike force is an interagency partnership that pulls in prosecutors from the DOJ's Antitrust Division, 13 U.S. Attorneys' offices and investigators from the FBI and agency Inspector General Offices.

At its launch, Assistant Attorney General Makan Delrahim, who oversees the Antitrust Division at DOJ, said that "more than one third of [the division's] 100-plus open investigations relate to public procurement or otherwise involve the government being victimized by criminal conduct."

Delrahim also said the strike force will focus on leveraging acquisition data to "identify potential red flags of collusion" and previewed a planned interagency roundtable involving data scientists from the law enforcement and inspector general communities.

Jonathan Aronie, leader of Sheppard Mullin's government contracts group, said that task forces such as those deployed against organized crime and health care fraud can be very effective. However, applying the technique to government procurement could prove tricky because of the particular intricacies of federal procurement and antitrust laws, he said.

The attorneys advised government vendors to take a look at areas in their companies where "perceived" collusion violations could raise red flags. Some of those include selling products through channels and agents, relationships with small businesses, shared office space and different prices set for the same item. The concern is that such practices could be misinterpreted by investigators who may not be familiar with commercial practices.

They advised contractors to keep a close eye on their relationships with small businesses and agents and also to work to establish compliance programs, review their risk practices, train their workers to deal with investigations and set and enforce internal controls to prevent collusion.