Remarks as Prepared for Delivery
Good afternoon. Thank you, Davis, for the kind words of introduction. I also want to thank the Virginia Bar Association for the invitation to spend time with you today, and our hosts, the University of Richmond Law School.
Richmond is, as we all know, the capital of the commonwealth of Virginia. How fitting I am here to talk about the work that my colleagues and I are doing in the Procurement Collusion Strike Force. We are protecting taxpayers’ funds, safeguarding the procurement process and ensuring that markets are competitive. Virginia is the recipient of billions in federal government contracting dollars and home to one of the largest concentrations of federal government contractors in the country. It is also home to a workforce that not only includes government employees like me, but those who provide the support that the U.S. government needs to function, contractors and vendors.
I was reminded of this fact earlier today during my drive down from Washington. Before I even crossed the Potomac, the Arlington skyline appeared, with buildings emblazoned with the names of large government contractors. Next, after crossing into Virginia, a very concrete example of the role Virginia plays in the federal procurement landscape appeared — the Pentagon. Continuing down Interstate 95–itself built as part of the federally funded Interstate Highway System — I passed Ft. Belvoir, home to 26 different Department of Defense agencies, and then Quantico, which contains both a Marine Corps Base and the FBI academy.
My economist friends at the Antitrust Division are keen to remind me that anecdotes are not the same as data. Allow me to provide some. The federal government spends a tremendous amount of money on goods and services contracts in Virginia. In fiscal year 2022, Virginia companies received $89.6 billion in payments from U.S. government for goods and services, ranking Virginia among the top 10 states for federal procurement. The U.S. government customers include the Veterans Administration, the Department of Defense, the U.S. Navy, the U.S. Army, the U.S. Air Force and the Defense Logistics Agency. Those service branches and agencies — and many others — purchase goods and services from some of the largest Virginia-based companies: consultancies, manufacturers, service providers and technology companies. These agencies, departments, bases and installations provide tremendous opportunities for companies to do business with the federal government in service of meeting our varied missions.
If what’s past is prologue, alongside those opportunities are risks. And temptation. For those who are not inclined to ethical, legal behavior, this level of spending is a temptation. It attracts criminal conspirators who try to tilt the playing field in their favor. Why? As a bank robber once explained when asked why he robbed banks, “Because that’s where the money is.”
I need not look too far to the past to find the prologue in the defense space. Indeed, our work has shown that collusive schemes target U.S. defense spending. In Europe, our team charged several companies and executives for their roles in corrupting the contracts to provide perimeter security at, among other places, a U.S. Army base and a NATO facility, through bid rigging, customer allocation and price fixing, including on a contract worth more than $75 million. In another recent case with a Department of Defense connection, a defendant pleaded guilty to paying kickbacks related to construction services at a U.S. Army facility. And in another, a military contractor pleaded guilty to rigging bids on more than $17 million worth of U.S. Army contracts in Michigan and Texas. Just this Tuesday, a federal judge sentenced a company to pay nearly $9 million in criminal fines and restitution for rigging bids and committing fraud in connection with repair and maintenance work at U.S. military installations in South Korea.
The PCSF’s work has revealed that various set-aside programs are targets of criminal conspiracies. One involved more than $240 million in government contracts set aside for disabled veterans who own small businesses that instead went to someone who did not serve, was not disabled and was not entitled to those contracts. The defendant was recently sentenced to 27 months in prison and ordered to pay a $1.75 million fine for his role in the long-running scheme to defraud the U.S. The second involved military contractors who illegally prepared and procured sham quotes for government contracts totaling over $7.8 million.
The past has many examples of price fixing, bid rigging and fraud, across a wide spectrum of government procurement. I want to pivot now to the future.
Several recent laws promise to increase the U.S. government’s spending in Virginia. Principal among those are the Infrastructure Investment and Jobs Act (“IIJA”), the Inflation Reduction Act of 2022 (the “IRA”) and the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (the “CHIPS Act”).
Focusing on the IIJA, the federal government will spend billions in Virginia over the next several years. That includes $3 billion for roads, bridges, roadway safety and major projects; $1.2 billion for public transit; $495.3 million for infrastructure resilience; $192.7 million for ports and waterways; $127.2 million for airports; $126 million for clean water, including replacing lead water service lines; $106 million for EV charging; at least $100 million for broadband; $90.7 million for clean energy; and $32 million for clean school busses.
That spending represents a generational chance for growth and improvement. It could also be, if not properly secured, a generational chance for collusive and fraudulent schemes to flourish. Again, past is prologue, with many recent examples in infrastructure cases. We uncovered a bid-rigging and bribery scheme involving contracts at a state transportation agency, which led to prison sentences for all defendants, including one sentenced to six-and-a-half years in federal prison. We investigated and prosecuted a wire-fraud scheme that targeted auctions for vehicles at the largest public transit agency in the U.S. We successfully tried a case involving an engineering company executive for his involvement in a years-long bid-rigging and fraud conspiracy over the course of more than 300 state contracts for drainage structures for roadways. Our first criminal monopolization case since the 1970s involved an attempt to carve up the market for publicly funded highway repairs in the Rocky Mountains and was, not coincidentally, a direct result of a PCSF outreach effort.
The Department of Justice and the PCSF are prepared to make good on our commitment to root out the increased risk of anticompetitive collusion resulting from trillions of dollars that will be distributed to federal, state and local government agencies through the IIJA, the IRA and the CHIPS Act. To that end, last year the PCSF expanded to include four additional law enforcement partners. We remain focused on this work, both at the Antitrust Division and more broadly in the federal law enforcement community. In other words, there are cops on the beat. We are collaborating across the law enforcement community, both domestically and internationally, to conduct proactive investigations targeted at key sectors of our economy. In those proactive investigations, we are deploying more aggressive tools such as wiretaps, undercover agents, data analysis and human source development.
We are also enlisting government employees and contractors to be our eyes and ears to bring us the leads that turn into investigations. We have trained more than 30,000 government officials, including the auditors and procurement officers who are best positioned to spot the red flags of collusion. These efforts have shown results: more than 100 investigations opened, more than 45 guilty pleas and trial convictions, over 60 companies and individuals prosecuted and more than $60 million in criminal fines and restitution, all relating to over $375 million worth of government contracts.
I want to step back a bit from the PCSF and talk about a case from another part of our criminal program. This case, and its recent resolution, shows our current thinking when confronting unmistakably criminal conduct in an industry that is highly regulated, or, as relevant to the PCSF, where much of a business’ activities are selling to the government. To summarize, the Antitrust Division, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the FBI and the U.S. Postal Service Office of Inspector General uncovered long-running price-fixing, bid-rigging and market-allocation schemes affecting many generic medicines. The conspirator companies raised prices of essential medicines and deprived Americans of affordable access to prescription drugs. Ultimately, seven generic pharmaceutical companies faced criminal charges for their participation in the schemes. In late August, the last of those companies resolved their criminal charges. All told, the seven generic drug companies collectively agreed to pay more than $681 million in criminal penalties. The resolutions include the three largest criminal penalties or fines for domestic antitrust crimes.
While record-high fines for domestic cartels are inherently notable, there’s another aspect of the resolutions that I want to focus on. For the first time in a criminal case, the Antitrust Division required business-line divestitures. More specifically, we insisted that the two final corporate defendants make timely divestiture of their respective drug lines for pravastatin, a widely used cholesterol medicine that was a core part of the companies’ price-fixing conspiracy.
This extraordinary remedial term reflects our focus on ensuring that corporate wrongdoers cannot profit from antitrust crime. Companies in heavily regulated industries, or companies that are heavily dependent upon government contracts, are on notice that the Antitrust Division will not hesitate to hold them accountable. We in the Antitrust Division and the PCSF will seek terms that truly restore competition — not just a one-time fine.
Corporate wrongdoers cannot hide behind the specter of debarment to avoid liability. For too long, big companies sought to escape just punishment because their business features significant collateral consequences from a criminal conviction. And while those collateral consequences are real, and we do consider them when resolving criminal matters involving corporations, a lack of accountability is in some ways tragic. Real accountability promotes respect for the law, protects victims and makes them whole and provides general deterrence. Real accountability, including the novel resolution to the generic drug charges, can make a company truly reform its corporate culture and commit to the compliance investments that will prevent recidivism.
And that is where I want to close today — by reaffirming that criminal antitrust enforcement is and will remain a top priority for the Department of Justice. The Antitrust Division’s criminal enforcement program is committed to vigorous antitrust enforcement against price-fixing cartels and other forms of per se unlawful horizontal collusion among competitors, as well as criminal monopolization and other crimes that disrupt competition and the competitive process. These crimes steal from and cheat American consumers, workers and taxpayers out of the benefits of competition. We are firmly committed to holding accountable the executives and companies that perpetrate and profit from anticompetitive crimes. In an era of increased consolidation, inflation and skyrocketing prices for consumers, deterring, detecting and prosecuting these offenses has never been more important.
You can do your part. Take the message of enforcement and compliance to your clients. How you advise your clients about their creating a culture of compliance, one that starts at the top, can make all the difference. Compliance with the law is good for business and good for the nation. The current alignment of incentives is a constellation — one that enhances enforcement, protects government purchasers and taxpayers and benefits government contractors who conduct business ethically and legally. I hope you will join my colleagues at Department of Justice and me in that effort.
 Shakespeare, William. The Tempest, Act 2, Scene 1 (ca. 1611).