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Anti-Corruption

United States: Procurement Collusion Strike Force Turns Two – Where are we now?

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In brief

Two years ago, on 5 November 2019, the Department of Justice (DOJ) announced the formation of the Procurement Collusion Strike Force (PCSF). DOJ press releases indicated the purpose was to create a joint, collaborative interagency partnership focused on deterring, detecting, investigating, and prosecuting antitrust crimes. The Strike Force has prosecutors from 22 US Attorneys’ Offices and 7 national law enforcement partner agencies, including the Antitrust Division of the DOJ, investigators from the Federal Bureau of Investigation, and the Inspectors General for multiple Federal agencies. To date, the PCSF is active in almost a quarter of US judicial districts and coordinates with many US agencies and offices.

Contents

  1. Comments
  2. Background
  3. In depth 
  4. Conclusion

Comments

The objectives of the PCSF are to deter, detect, investigate, and prosecute antitrust crimes, such as bid-rigging conspiracies, related fraudulent schemes, and collusion affecting government contracting. This is a major area of importance because roughly one out of every 10 dollars of federal spending is allocated to government contracting. In fiscal year 2020, the federal government spent more than USD 665 billion on contracts, an increase of over USD 70 billion from fiscal year 2019. Half of this increase, or USD 35 billion, is attributed to spending on medical supplies and pharmaceuticals to treat COVID-19 patients, among other things related to COVID-19. This amount represents an increase of about 14% from the USD 586 billion spent in 2019 and is projected to continue increasing annually. The Organization for Economic Co-operation and Development estimates that eliminating illegal and anticompetitive collusion in procurement could reduce procurement costs by 20% or more, or approximately USD 133 billion based on 2020 expenditures, using the OECD benchmark. About one third of the investigations from the Antitrust Division are related to procurement or government funds issues.

Background

The PCSF has been extremely active in its first two years of existence: 

  • Over 50 federal, state, and local government agencies have reached out for training and assistance with protecting their procurement processes, which the PCSF addressed in its first six months by leading over 30 in-person outreach presentations in 13 states. 
  • Even during the pandemic, the PCSF led over a dozen interactive virtual training programs for approximately 2,000 criminal investigators, data scientists, and procurement officials from nearly 500 federal, state, and local agencies. 
  • The PCSF has provided training to over 17,000 agents, investigators, analysts, auditors, attorneys, data scientists, and procurement officers on how to spot antitrust crimes.

Since its launch, the PCSF has had significant positive enforcement results: 

  • Prosecuting collusion in the Belgian security market related to US and NATO military installations, with Belgian security firm G4S Secure Solutions NV (G4S) pleading guilty on 25 June 2021 and two former directors pleading guilty on 18 October 2021 for their roles in a conspiracy to rig bids, fix prices, and allocate customers for security services contracts. G4S agreed to pay a USD 15 million criminal fine. Days after G4S’s guilty plea, on 29 June 2021, a federal grand jury returned an indictment charging a second Belgian security services company, Seris Security NV (Seris), and three former executives at G4S and Seris for their roles in the conspiracy. 
  • Prosecuting bid-rigging in the cement industry, with a Minnesota concrete contractor pleading guilty on 28 September 2021 to rigging bids on public concrete repair and construction contracts in the state of Minnesota.
  • Prosecuting big-rigging and fraud in the insulating industry, resulting in five convictions connected to a USD 45 million scheme.

In depth 

Last month, on 13 October 2021, Daniel Glad, the Director of the PCSF, gave a speech about the “Mission and Model” and “Enforcement Priorities” of the PCSF. He commented on the “whole-of- government” approach that was called for in President Biden’s Executive Order (EO) dated 9 July 2021. Director Glad emphasized the PCSF’s commitment to working cooperatively with other agencies, setting a model for the whole-of-government approach to aggressively protect competition, as encouraged by the EO, and safeguard against collusion in public contracting. 

Director Glad described the two primary objectives of the PCSF. First, to deter antitrust crimes in the procurement process through outreach and training. Second, to facilitate more effective detection, investigation, and prosecution of conduct that undermines or distorts competition in the procurement process. The PCSF seeks to leverage interagency collaboration to ensure that bidding and award processes are fair, open, and competitive; and to eliminate potential entry barriers in public procurement. 

The PCSF’s enforcement priorities also include per se violations of the Sherman Act impacting government procurement at any level as well as prosecuting other competition-corrupting crimes, including procurement collusion and fraud in government programs intended for underserved communities, known as “set-aside fraud,” and in infrastructure spending. 

Set-Aside Fraud

Government programs aimed at providing opportunities for disadvantaged communities are an important part of the American economy, and the protection of the integrity of these programs is a priority for the PCSF. On 17 March 2021, a former owner of several construction companies was indicted for defrauding the United States to obtain government contracts intended for companies owned by service-disabled veterans. The conspirators allegedly attempted to secure over USD 250 million in government contracts that were “set aside” for these companies, when in fact the conspirators’ companies were ineligible. 

Infrastructure

Infrastructure is essential to the American economy and social structures. Given the considerable amount of government resources currently allocated to infrastructure, it is no surprise that the PCSF has been increasing enforcement in this area of public contracts. For example, an engineering firm recently pleaded guilty to conspiracies to rig bids and defraud the North Carolina Department of Transportation and agreed to pay a USD 7 million criminal fine and USD 1.5 million in restitution. This guilty plea was a victory for the PCSF, which spearheaded the investigation, and demonstrates the commitment of the agencies to pursuing enforcement against bid-rigging and other criminal conduct in the infrastructure sector. Moreover, these enforcement efforts will likely intensify considering the push from the Biden administration to increase infrastructure projects and investment.

PCSF Goes Global and Digital

There has been significant expansion of the PCSF since its inception in 2019, including a wider reach through the launch of PCSF: Global. The goal of PCSF Global is to “build connections with enforcement counterparts and tackle potential collusion in bids for the staggering amount of U.S. funds spent abroad.” Through the creation of these international partnerships with enforcement authorities, PCSF: Global will expand its reach in the investigative process to combat collusion that affects US procurement abroad. 

The PCSF is expanding not only across borders, but also across technologies. The PCSF established the Data Analytics Project to encourage the development of analytical tools to uncover and fight collusion in US procurement. It is aimed at collaborating with agencies to implement collusion analytics, that is, using data analytics to detect collusion. The Data Analytics Project has held multiple webinars—attended by more than 1,000 data scientists, analysts, and auditors—to discuss the use of data analytics to combat bid rigging, with expectations to roll out more workshops in the future. 

Conclusion

The EO’s whole-of-government approach is a catalyst for more aggressive enforcement of antitrust laws and strongly encourages federal agencies, including task forces like the PCSF, to take a more active role in regulating competition. Companies should expect greater collaboration between agencies and scrutiny of conduct that undermines and distorts the procurement process. For this reason, it is crucial for businesses looking to participate in procurement to prioritize compliance.

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Author

Jeff Martino is a partner in the Firm's North America Antitrust & Competition Practice Group and National Security Practice Groups. He brings an in-depth understanding of a wide variety of white collar and fraud related matters to his antitrust litigation and investigations practice. Jeff is co-lead of the Firm's Global Cartel Task Force and represents multinational corporations and their boards and executives in high-stakes criminal and civil investigations by the US Department of Justice (DOJ) and other federal and state agencies. Jeff draws upon his extensive criminal investigations, litigation, and enforcement experience to advise clients through sensitive matters pertaining to international cartel actions and white collar investigations. Prior to joining Baker McKenzie, Jeff spent nearly two decades at the DOJ and his last five years as Chief of DOJ Antitrust Division's New York Office. He also served in the U.S. Attorney Office for the District of Arizona where he was the Deputy Chief of the Public Corruption and Financial Crimes Unit. He has extensive experience as "first chair" on trials and investigations in the most complex areas of criminal antitrust, market manipulation, and consumer protection.

Author

Mark Weiss is a partner in the Firm's North America Antitrust & Competition Practice Group and the North American Chair of the Practice’s Litigation Task Force. He is a seasoned litigator with deep expertise in antitrust, class action, and federal multi-district litigation and represents clients in high-stakes disputes across a range of industries, with a focus on complex commercial and competition-related claims. Mark defends clients in nationwide class actions and seamlessly navigates the procedural and strategic challenges of MDLs in federal court. Mark’s is also a highly regarded criminal antitrust attorney with significant experience representing clients in complex cartel investigations and enforcement actions. Mark has a strong track record advising corporations and executives in high-stakes matters involving the U.S. Department of Justice’s Antitrust Division, particularly in cases involving leniency and cooperation strategies. He has a deep understanding of the leniency program and is a trusted advisor in navigating cross-border investigations. Mark also has extensive experience as a leading antitrust merger attorney and has led numerous clients through complex regulatory reviews and merger clearance processes. He advises on all aspects of pre-merger strategy, including Hart-Scott-Rodino (HSR) filings, competitive risk assessments, and engagement with the Federal Trade Commission and Department of Justice. Mark advises clients on a wide range of antitrust compliance issues, helping companies design and implement effective compliance programs tailored to their business operations and risk profiles. Mark is an expert in handling matters consistent with recent antitrust trends including artificial intelligence, algorithmic pricing, information-sharing, and both vertical and horizontal practices. He regularly conducts internal audits, risk assessments, and training for legal and business teams, and provides strategic guidance on interactions with competitors, pricing practices, and distribution arrangements.

Author

Audrey van Duyn is an associate in Baker McKenzie's Antitrust & Competition Practice Group in New York. She advises clients on all aspects of antitrust law before the Department of Justice and Federal Trade Commission. Prior to joining the Firm, Audrey was a litigation associate at a large national law firm where she assisted with a variety of civil, criminal, and regulatory matters. During law school, Audrey interned for Judge Nicholas G. Garaufis of the US District Court for the Eastern District of New York and for Judge Paul G. Gardephe of the US District Court for the Southern District of New York. She worked as a research assistant for Professor Daniel J. Capra and focused on evidence and criminal procedure. She was also a member of the Fordham Moot Court and the Fordham Urban Law Journal.

Author

Natalie Flores is the regional knowledge attorney for the Americas in Baker McKenzie’s Global Antitrust & Competition Group, based in the Firm’s Mexico City office. With over fourteen years of legal experience, she leads strategic knowledge initiatives across the Americas, including legal content development, client training, and thought leadership. Her work supports the Firm’s global competition practice and enhances client engagement through tailored insights and resources.
Natalie began her career as a litigator, focusing on consumer protection and unfair competition, including class actions under Section 5 of the FTC Act. She continues to advise clients on multijurisdictional competition matters and regulatory processes, drawing on her deep understanding of enforcement trends and cross-border dynamics.
She is actively involved in the Firm’s industry groups, particularly Energy & Infrastructure, and serves on the board of Mujeres en Energías Renovables en México (MERM), where she advocates for clean energy and gender equity in the renewable energy sector.

Author

Kristen is a senior associate in Baker McKenzie's North America Antitrust & Competition Practice Group in Washington, DC. She advises clients on all aspects of antitrust law before the Department of Justice, Federal Trade Commission, US courts, and foreign competition authorities. She also defends clients involved in follow-on civil actions and assists clients with internal investigations and compliance programs.
Kristen also maintains an active pro bono practice. Her recent pro bono matters include obtaining withholding of removal for an individual from Honduras, obtaining USD 900,000 in compensation from the State of Maryland for a wrongfully convicted individual, and representing an individual in an innocence case in West Virginia.
Prior to joining Baker McKenzie, Kristen was a litigation associate working on antitrust matters at another large international law firm.
During law school, Kristen was a legal research and writing fellow and represented clients before the DC Superior Court as a student-attorney in Georgetown's Domestic Violence Clinic. She was also a law clerk for the United States Attorney's Office in Greenbelt, MD.

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