On February 5, 2020, the Antitrust Division of the U.S. Department of Justice (“DOJ”) announced the indictment of a Missouri man – the third individual to be charged – for participation in a conspiracy to rig bids submitted to the General Services Administration (“GSA”) at online auctions for surplus government equipment. The indictment and DOJ’s ongoing investigation into GSA auctions reflect the Antitrust Division’s increased scrutiny on the government contracting space in recent years, culminating in the launch of the Procurement Collusion Strike Force (“Strike Force”) in November of last year.
The indictment alleges that Alan Gaines conspired to suppress and eliminate competition by fixing prices, rigging bids, and allocating markets for sale-lots of excessed equipment offered for sale by GSA Auctions. Gains is the third individual charged in the DOJ and GSA Office of Inspector General’s ongoing joint investigation into bid rigging at GSA auctions. Last year, two other individuals—Marshall Holland and Igor Yurkovetsky—pleaded guilty to criminal violations of the Sherman Act for their role in the bid rigging scheme. DOJ alleges that the co-conspirators agreed who would submit bids for certain lots offered at GSA auctions and who would ultimately win certain lots.
In November 2019, the Antitrust Division announced the creation of a new nationwide “Strike Force” designed to combat criminal antitrust violations in the government procurement process. The Strike Force includes prosecutors from the DOJ’s Antitrust Division and 13 U.S. Attorneys’ Offices, as well as investigators from various partner agencies such as the Federal Bureau of Investigation, the Department of Defense Office of Inspector General, and the U.S. Postal Service Office of Inspector General. As part of his remarks on the launch of the newly-formed Strike Force, Assistant Attorney General Makan Delrahim stated, “[A]ny amount of overcharge caused by illegal bid rigging or other anticompetitive criminal conduct inflicts significant economic harm on the government and the taxpayers.”
DOJ will continue to be active in the government procurement space going forward. Remarking on the state of criminal antitrust enforcement on Friday, February 7, 2020, Deputy Assistant Attorney General Richard Powers stated that the Antitrust Division will remain focused on prosecuting crimes that affect the government. He also noted that more than 30 federal, state, and local government agencies have contacted the Strike Force about participating in its initiatives. According to Powers, more than one third of the Antitrust Division’s open investigations relate to government procurement or other criminal conduct harming the government.
All companies that serve as vendors to the U.S. government should be aware: DOJ is on the hunt for antitrust violations committed by government contractors and has devoted significant internal resources to the effort and forged relationships with state and local enforcement personnel. We strongly recommend that any client doing business with the federal government assess compliance with the antitrust laws now, before DOJ steps in to investigate – or worse, prosecute criminally. Corporate fines are regularly in the tens of millions of dollars and, often, exceed $100 million, and the average individual prison sentence for convicted executives is now almost two years. The formation of the Strike Force also underscores the need for a robust antitrust compliance program, which can prevent serious antitrust programs and also lessen the impact if problems are discovered. As a result, all companies that do business with the government should consider updating and revising their compliance programs to reflect DOJ guidance.
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