Federal investigators continue their focus on procurement
A flurry of federal prosecutorial activity in late 2024, as well as a statement from several institutional stakeholders in a key federal initiative to combat procurement fraud, provided a valuable reminder for government contractors: The US Department of Justice (DOJ)’s Antitrust Division-led Procurement Collusion Strike Force (PCSF) remains a vigilant and aggressive watchdog over federal spending. These developments demonstrate the potentially severe consequences that government contractors face from collusive activity that interferes with competitive government bid processes.
With the second Trump Administration now under way, the PCSF – one of the signature developments of antitrust enforcement in the first Trump Administration – is projected to remain a fixture in DOJ’s arsenal for protecting government contracting processes, even if other priorities and policies shift. At a late January 2025 event, a senior DOJ official singled out the PCSF as a “really, really important tool” for the government at a time when its focus was on the effective allocation of finite resources.
Antitrust actions against government IT and tech vendors
On September 24, 2024, news media reported that agents of the Federal Bureau of Investigation (FBI) and Defense Criminal Investigative Service (DCIS) executed a search warrant at the Virginia headquarters of Carahsoft Technology, a large government IT and tech vendor. The raid – confirmed to the press by a company spokesperson – was widely linked to a DOJ price-fixing investigation of the company’s government contracts.
Just over a month later, the Antitrust Division announced criminal charges against six individuals – including two grand jury indictments – for their alleged roles in schemes to rig bids, defraud the government, and pay bribes and kickbacks related to IT services and products sold to federal agencies, including the Department of Defense (DOD). The allegations include that certain of the six individuals learned confidential information through “positions of trust” held with the government and used that information “to craft bids at artificially determined, non-competitive, and non-independent prices.”
On January 14, 2025, the DOJ announced that four of the six individuals had pled guilty, and that these were “the first guilty pleas in the Justice Department’s ongoing investigation into IT manufacturers, distributors, and resellers who sell products and services to government purchasers.” Filings and statements regarding the cases suggest significant dollar-value contracts and large loss amounts, which in turn suggest that DOJ could seek significant sentences. While there is no indication that the two events are directly related, both appear to involve the provision of IT services to the federal government and concerns about anticompetitive conduct.
The PCSF’s approach
The PCSF is an interagency initiative that began during the first Trump Administration to better “detect and deter” bid rigging and other collusive activity that impacts public procurement. It is now in its fifth year of existence. Led by the Antitrust Division and styled as a “virtual strike force,” the PCSF’s original membership consisted of 13 US Attorney’s Offices and 5 federal investigating agencies (including the FBI and DOD’s Inspector General). Its membership has grown in the intervening years, with additional US Attorney’s Offices and – importantly – more than twice as many law enforcement agencies joining the initiative.
While the Antitrust Division always placed the investigation and prosecution of bid rigging at the center of its criminal enforcement priorities, the PCSF has proven itself to be a more systematic and organized approach to policing collusive activity that impacts government procurements, as it includes a larger coalition of investigators and prosecutors acting on a broader mandate with respect to a wider swath of procurement activity.
By building an interagency coalition, PCSF prosecutors have enhanced DOJ’s detection network for potential offenses by reaching audiences of law enforcement agents, contracting officers, and analysts at dozens of federal, state, and local agencies. The PCSF reports that it has trained over 38,000 individuals involved in government contracting to better recognize red flags of collusion and to elevate these concerns to law enforcement personnel.
In addition, the PCSF has encouraged the development and use of more sophisticated data analytics techniques within federal agencies in order to more efficiently detect bidding anomalies that may signal illegal conduct impacting contracting. Furthermore, the initiative has ensured that investigations and prosecutions are backed by the institutional commitments of its member agencies to follow through on investigating matters and, on DOJ’s part, to pursue a wide variety of criminal charges and litigation when needed to deter this conduct.
As of September 30, 2024, the PCSF had over 140 federal grand jury investigations opened, over 60 criminal guilty pleas or trial convictions, and over $65 million in fines and restitution imposed. Perhaps more notably, from the standpoint of its deterrence mission, PCSF matters have resulted in a handful of individual sentences that stand out in the history of Antitrust Division prosecutions, including a 78-month prison sentence and nearly $1 million fine in 2023. The PCSF also has shown an ability to work across borders, securing both criminal charges and sentences for conduct by foreign companies and individuals that has impacted US contracting processes overseas.
Significance of recent activity
The events underscore three risks that federal contractors may face when navigating competitive bidding processes and interacting with their competitors.
- Because PCSF investigations are criminal, law enforcement agents can avail themselves of investigative techniques that are not available in other enforcement actions, including civil False Claims Act (FCA) investigations. In addition to search warrants to seize evidence, which require the authorization of a federal magistrate and a showing of probable cause, these can include techniques such as wiretaps.
These tools often become available to investigators after they develop probable cause through whistleblowers and individual cooperators, who commonly feature in these investigations because of the Antitrust Division’s focus on collusive conduct that involves multiple people or companies. This can create strong incentives for participants in bid-rigging or price-fixing conspiracies to flip and assist investigators – such as by surreptitiously recording conversations with targets of the investigations – in exchange for more lenient treatment. The four individuals who recently pleaded guilty, for instance, may be cooperating with the government’s prosecution of the indicted matters or its ongoing investigations in exchange for favorable sentencing in their own cases.
PCSF investigations also are able to leverage criminal penalties. As noted, PCSF efforts have resulted in lengthy prison sentences and large individual and corporate fines. These fines are in addition to other potential penalties, including fines imposed for civil FCA violations, which can flow from essentially the same underlying conduct and then falsely certifying independent pricing, as well as potential suspension or debarment from government contracting. - The recently filed charges illustrate that the PCSF has not – and likely will not – confine its ambit to violations of federal antitrust laws. For instance, in one of the October 2024 indictments, the grand jury charged 13 criminal counts – including conspiracy to defraud the US, bribery, and money laundering – without also charging an antitrust violation.
Some of the most common charges in PCSF cases have been mail and wire fraud, often based on the defendant’s receipt of US government payment by wire on contracts that were allegedly affected by anticompetitive conduct, as shown by two counts in the other October 2024 indictment. - The recent activity shows how the PCSF can act as a force multiplier for investigators. In addition to the Antitrust Division, the US Attorney’s Office for Maryland is involved in prosecuting the matters, and federal agents from the FBI, DCIS, and the Inspectors General of both the National Security Agency and Central Intelligence Agency investigated the case.
The ability to bring together agents from several agencies – especially in the procurement context – can allow law enforcement to identify more quickly patterns or other common signs of bid rigging across a series of bids that may span multiple agencies. Additionally, by identifying a greater range of potentially affected contracts, investigators may be able to prove greater loss or higher volumes of affected commerce involved in those contracts, both of which are key drivers to obtain more stringent criminal sentences. This, in turn, enhances investigators’ leverage to obtain cooperation and plea agreements.
Takeaways
Five years after its creation, the PCSF has solidified its presence at the heart of US criminal antitrust enforcement. There have been no signs that its work will let up, and, as an enforcement initiative that emerged during the first Trump Administration, it may feature prominently in the second.
This time around, however, its efforts and resources are more developed and organized, and it is now able to use more sophisticated detection techniques, including screens of agency procurement data that utilize data analytics tools to detect anomalies in bidding that could indicate potentially problematic conduct.
Government contractors are encouraged to prioritize compliance with antitrust laws and exercise good “bid hygiene” when involved in competitive contracting processes. This may involve bid team-specific training on antitrust issues, periodic auditing of contracts to detect potentially anomalous patterns, and ensuring appropriate follow-through on whistleblower tips or concerns about potential collusion.
For questions about this or related topics, please contact one of the authors or your DLA Piper relationship partner.
