While most of us have been returning to some normality this summer by heading back to favorite vacation spots, the Procurement Collusion Strike Force (“PCSF”)—an arm of the United States Department of Justice’s Antitrust Division—remained in the office. The PCSF’s diligence was rewarded, as earlier this summer it announced the first antitrust actions concerning foreign companies and federal procurement dollars spent overseas; specifically, the prosecutions of two Belgian security companies for alleged bid-rigging and price-fixing in association with the procurement of various security services for military installations in Belgium. The prosecutions underscore the PCSF’s commitment to root out and prosecute anticompetitive conduct impacting U.S. procurement dollars—no matter where in the world those dollars are spent. With the PCSF’s expanding investigatory scope and increasing cooperation with similar agencies worldwide, international entities—or domestic entities with an international presence—that contract with the federal government should be on high alert.
As previously covered in this blog, the United States Department of Justice’s Antitrust Division (the “Division”) initially established the PCSF in late 2019 to “deter, detect, investigate, and prosecute antitrust crimes and related criminal schemes that affect procurement, grant, and program funding at all levels of government.”
Its roster now includes, in addition to DOJ antitrust division members, 22 US attorneys’ offices and 486 member partners from 48 agencies. Further, the PCSF provided training on identifying potential anticompetitive behavior involving public funding to more than 10,000 criminal investigators, data scientists, and procurement officials.
Bolstered by early successes and overwhelming interest from federal, state, and local government agencies, over the course of the past two years the PCSF significantly expanded its training and investigatory scope to include, among other areas of focus, combating anticompetitive conduct impacting US procurement dollars spent overseas. In this vein, the PCSF recently announced its establishment of ”PCSF: Global” to “tackle potential collusion in bids for the staggering amount of U.S. funds spent abroad,” through the creation and maintenance of partnerships with international antitrust investigation and enforcement entities.
The G4S and Seris Prosecutions
It only took a matter of months for PCSF: Global to prove its worth. On June 25, 2021, the Division trumpeted its first international resolution, which involved the Belgian security firm G4S Secure Solutions NV (”G4S”) pleading guilty to conspiring to rig bids, allocate customers, and fix prices in connection with United States Department of Defense (“DoD”) and North Atlantic Treaty Organization Communications and Information Agency (“NCIA”) contracts (partly funded by the United States) for the provision of various security services at military bases and installations in Belgium. Only days after securing G4S’s plea, the Division announced a second action related to the same DoD contract—the indictment of another Belgian security services company, Seris Security NV (“Seris), and three named Belgian nationals who were executives at G4S and Seris (in addition to four other unidentified Belgian nationals) as alleged parties to the conspiracy.
Under the information filed in the United States District Court for the District of Columbia, G4S was charged with violating Section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring with other parties to allocate security services contracts in Belgium among co-conspirators, to rig bids, and to determine the prices at which contracts would be bid.
Rather than contest the charge, G4S entered into a plea agreement under which it will pay a criminal fine of $15 million and continue cooperating with the ongoing investigation. Seris and the three Belgian nationals each face a similar charge of violating the Sherman Act as a result of allegedly coordinating price increases, submitting predetermined, noncompetitive bids, and refraining from bidding in connection with the aforementioned DoD and NCIA contracts.
What This Means for US Government Contractors—EVERYWHERE
These recent actions serve as notice that no matter when a US government contractor (along with its officers/employees) does business, engaging in anti-competitive behavior will likely place it on the PCSF’s radar. Indeed, with federal procurement dollars already eclipsing $500 billion, and factoring in expected increases in federal spending over the next few years, the PCSF will likewise increase scrutiny of international (and domestic) procurements involving US government funds in an expanding effort to stamp out anticompetitive conduct.
However, entities that contract with the US government or otherwise receive federal funding (e.g., federal grants) can take steps to mitigate the risk of drawing the PCSF’s unwanted attention:
- As a starting point, the implementation of internal training programs geared toward assisting a contractor’s officers and employees in avoiding business practices that trigger criminal antitrust scrutiny is key. Further, all officers and employees involved with an international contractor’s contract management process and business teams must learn to identify and internally report anticompetitive behavior, as well as the risks of failing to do so.
- In parallel with internal training for employees and officers, international contractors should also review their existing anticompetitive compliance programs to identify gaps. In the event that a contractor either does not have an established antitrust compliance plan appropriately tailored to the contractor’s risk profile or identifies gaps in its existing anti-competition compliance plan, these shortcomings must be remedied to effectively mitigate internal antitrust risks. Significantly, a clear and effective anticompetitive compliance structure is also a key consideration under the Division’s Leniency Program, under which companies that proactively disclose potential anticompetitive behavior can earn significant mitigation credit, up to and including immunity for the company and culpable employees.
The G4S and Seris actions show that the PCSF has both the intent and resources to root out foreign entities in all industries that violate US antitrust laws in the context of federal procurement. To better take advantage of the end of the fiscal year buying spree and avoid defending claims raised by the PCSF, it is critical that foreign entities that do business with the federal government invest in the creation and maintenance of appropriate and robust compliance programs (in addition to conducting internal training) to avoid anticompetitive business practices that will trigger the PCSF’s long arm of scrutiny.