The PCSF consists of prosecutors from DOJ and 13 U.S. Attorneys’ Offices, along with investigators from the FBI, the Department of Defense (DOD) Office of the Inspector General and other federal inspectors general. The strike force leads a coordinated national response to combat antitrust crimes and related schemes in procurement, grants, and program funding at all levels of government.
On June 25, 2021, the PCSF announced its first international resolution, which involved a Belgian security firm, G4S Secure Solutions NV (G4S). G4S has pled guilty for its role in a conspiracy to rig bids, allocate customers and fix prices for defense-related security services, including services associated with a multimillion-dollar DOD contract awarded to G4S for military bases and installations in Belgium.
According to the charging documents, G4S conspired with co-conspirators to allocate security services contracts in Belgium among themselves and to determine the prices at which contracts would be bid from spring 2019 through summer 2020. In addition to the DOD contract, the contracts allegedly affected by the conspiracy included contracts for NATO’s Communications and Information Agency, funded in part by the United States. G4S has agreed to pay a criminal fine of $15 million and to cooperate in the ongoing investigation. Indicative of the fact that this type of conduct is being aggressively fought globally, the Belgian Competition Authority is also investigating allegations of bid rigging between Belgian private security firms in tendering procedures for the provision of security services to the Belgian Ministry of Defence and NATO, as well as to private customers.
The PCSF conducts investigations that span over a broad range of procurement collusion and fraud matters. From defense and national security contracts to public works and projects where contractors are primarily delivering supplies to the federal government, the PCSF is on the lookout for wrongdoing. As is evidenced by the G4S matter, the PCSF focuses not only on investigating conduct within the United States. It also conducts international investigations into conduct affecting U.S. government procurement that occurs worldwide. According to its website, the PCSF has sponsored multiple trainings on recognizing antitrust crimes to over 10,000 agents, investigators, analysts, auditors, attorneys, and procurement officers since its inception. Incredibly, it has opened just under 40 investigations as of the date of this alert.
The desire to deal more effectively with collusion in public procurement is certainly not limited to U.S. entities like the PCSF. In March 2021, the European Commission published a notice entitled “Tools to fight collusion in public procurement and guidance on how to apply the related exclusion ground.” While European and national competition authorities have enforced competition laws in the case of bid rigging offences, such enforcement takes places after the damage is done; that is, after the contract has been awarded and, in most cases, fully performed. The aim of the notice is therefore to better equip the contracting authorities to detect and address collusion in good time.
The European Commission recognizes some of the challenges these authorities may face, such as limited resources (especially in the case of smaller authorities), and lack of training. The European Commission’s notice urges its member states and contracting authorities to take measures to ensure sufficient resources are available, incentives are in place to reward staff for detecting and addressing instances of collusion, and adequate training exists for procurement staff. In all these areas, the European Commission is considering further measures to assist the member states in achieving these objectives.
The PCSF is making it clear that it will not tolerate businesses engaging in criminal conduct that violates the antitrust laws and tries to exploit vulnerabilities in the federal procurement process. Government contractors worldwide must take heed of PCSF’s mandate, and do all that they can to prevent and thwart such conduct in their business activities. Europe also is increasingly focusing on ensuring businesses and individuals have compliance protocols to more effectively tackle collusion.
Individuals and businesses that contract with, receive grant funding from, or otherwise enter into agreements with the U.S. government can take proactive steps to minimize risk in this area. First and foremost, they can implement training programs. Even where the training already exists, training updates can help ensure all employees involved in the procurement and contract management processes understand what constitutes anti-competitive behavior and are aware of PCSF’s increased enforcement efforts worldwide, as well as the enforcement efforts of the European Commission. Individuals and businesses should also review (and update as necessary) their compliance programs in the areas. In the event that gaps are identified, they should consider working with experienced outside counsel to take swift corrective action and mitigate antitrust risks.
Fueled by the Biden administration’s recently issued National Security Study Memorandum stating that the fight against corruption is a core U.S. national security interest (see our June 16 update), the U.S. has made it clear that individuals engaged in illegal conduct, such as antitrust and anti-competitive behavior will be vigorously investigated and prosecuted. The U.S. government, as the largest procurer of goods and services in America, spends upwards of $500 billion annually and that number is expected to continue to rise in the coming years. Accordingly, the PCSF, the U.S. government, and international organizations like the European Commission will be scrutinizing procurement transactions in an effort to minimize fraud and illegal transactions.
Client Alert 2021-190