The Procurement Collusion Strike Force
On November 5, 2019, the Department announced the Procurement Collusion Strike Force, an interagency partnership that is leading a national effort to protect taxpayer-funded projects from antitrust violations and related crimes at the federal, state, and local levels. Prosecutors from the Division’s five criminal offices and 13 U.S. Attorneys’ Offices have partnered with agents from the FBI and four federal Offices of Inspector General, including the U.S. Postal Service and Department of Defense, to conduct outreach and training for procurement officials and government contractors on antitrust risks in the procurement process. These district-focused teams of prosecutors and agents will also work together to jointly investigate and prosecute procurement-related criminal cases.
Since its November 2019 launch, initially under the leadership of Director William Sloan, on detail to the Antitrust Division from PCSF-partner, the U.S. Attorney’s Office for the Eastern District of Michigan, and now under the leadership of current Acting Director Tee St. Matthew-Daniel, the PCSF has generated an overwhelmingly positive response from all corners of the procurement world. In particular:
- Over 50 of federal, state, and local government agencies have already reached out to the PCSF seeking outreach training, assistance with safeguarding their procurement processes, and opportunities to work with the PCSF on investigations.
- Indeed, the PCSF’s attorneys had already led over 30 in-person outreach presentations in 13 states and D.C. before the March 2020 Presidential declaration of a national emergency for COVID-19. Since then, the PCSF has led over a dozen interactive virtual training programs for approximately 2,000 criminal investigators, data scientists, and procurement officials representing nearly 500 federal, state, and local agencies.
- The PCSF website’s reporting portal has also received numerous citizen complaints of possible illegal conduct for potential investigation.
- We already have opened several grand jury investigations in connection with the PCSF.
- In addition, there has been significant public attention given to the PCSF’s formation in the news media and the antitrust and public contract law bars, which we anticipate will help achieve the PCSF’s goal of deterring illegal conduct in the first instance.
FAQs: The PCSF
Question: Why was the PCSF created?
Answer: When competitors collude and conspire to rig bids, fix prices, or allocate markets they distort the free market and harm customers with high prices and lower quality goods and services. The problem is particularly acute in the area of public procurement, where the customer is the government and American taxpayers foot the bill for artificially high prices.
Question: Does the nature of public procurement make it particularly vulnerable to collusion?
Answer: Yes, for three reasons.
First, there are often relatively few qualified sellers for a given project, given that government agencies often require specialized goods and services. In addition, rush or emergency projects arise in government procurement, such as disaster-relief projects, and the exigency creates opportunities to cheat. Indeed, that is one of the many reasons why the PCSF is on high alert amid the COVID-19 pandemic.
Second, the large volume and variety of goods and services contracted by the government creates monitoring difficulties. Given the growth in government spending over time, it is difficult for audit and investigation resources within agencies to keep pace with the spending at the federal, state, and local levels.
Finally, public procurement involves large sums of federal money. Roughly one out of every 10 dollars of federal spending is allocated to government contracting. In 2018, the federal government spent more than $550 billion, or about 40% of all discretionary spending, on contracts for goods and services. The sheer monetary value of government projects presents an enticing opportunity for greed to prevail over ethical conduct. Based on an OECD estimate that eliminating bid rigging could help reduce procurement costs by 20% or more, reducing illegal and anticompetitive collusion in procurement could save U.S. taxpayers tens of billions of dollars per year.
Question: How is the PCSF different from the Division’s prior efforts?
Answer: The Division has significant experience prosecuting violations relating to government procurement going back decades. Today, more than one third of the Antitrust Division’s 100-plus grand jury investigations relate to public procurement or otherwise involve the government as a victim of criminal conduct. What separates the PCSF from the Division’s prior efforts, however, is that it harnesses the combined capacity and expertise of its members.
Question: What are the advantages of a district-based strike force model?
Answer: The PCSF’s decentralized, district-based structure has a number of advantages. Among them, each district team of prosecutors and agents can target their outreach efforts to reach the relevant entities on both the buy-side and sell-side of government procurement in that district, from government agencies to contractors, trade associations, and grant recipients. Additionally, the PCSF’s district teams have also welcomed the participation of additional in-district working partners. In fact, several of our district teams have more than 10 working partners.