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.