A little over a year after its creation the Procurement Collusion Strike Force has announced its first public indictments. The Strike Force was created to focus on rooting out collusion and related schemes aimed at impeding competition in public contracting. As DOJ made clear when the Strike Force was created, DOJ views price-fixing in government contracting as a particularly harmful since it directly harms U.S. taxpayers. The Strike Force includes prosecutors from both the DOJ Antitrust Division and United States Attorney’s offices, the FBI, and Inspectors General from the Department of Defense, the U.S. Postal Service, and the General Services Administration.
A federal grand jury in North Carolina indicted Contech Engineered Solutions LLC and Brent Brewbaker, a former executive at the company for their roles in a nearly decade-long conspiracy to rig bids for aluminum structure projects funded by the United States and the North Carolina Department of Transportation (NCDOT). Contech and Brewbaker were also charged with mail and wire fraud arising from acts in furtherance of the conspiracy. The case is part of a larger ongoing investigation into the aluminum structures industry.
From at least 2009 through Fall 2018 Contech, its co-conspirator (“Company A”), and other companies that were not named in the indictment all submitted bids to NCDOT for aluminum structure projects. DOJ alleges that Contech and Company A conspired so that Contech would bid higher than Company A when submitting bids to NCDOT. In addition to their roles as competitors, Contech also supplied Company A with aluminum pieces that Company A used in its projects for NCDOT. Although the indictment does not specify what Contech received in return for submitting higher bids than Company A, it is possible that Contech’s sales of aluminum pieces to Company A played a role in the conspiracy. The indictment requires Contech and Brewbaker to forfeit any property or proceeds it received from this scheme.
The Contech indictment demonstrates the expanding reach of the Procurement Collusion Strike Force. Although the Procurement Collusion Strike Force officially partnered with thirteen U.S. Attorneys’ Offices, it has not partnered with the Eastern District of North Carolina, the U.S. Attorneys’ Office that brought this indictment. Also, the Antitrust Division’s press release regarding the indictment did not mention any assistance it received from state law enforcement despite the allegations centering on the harm suffered by NCDOT. As this case unfolds, it could shed light on any potential role state law enforcers and procurement agencies will play with future investigations under the purview of the Procurement Collusion Strike Force.
It is likely that the Contech indictment is just the beginning for the Procurement Collusion Strike Force and that more indictments from the Strike Force will be forthcoming. In a speech this past June, Assistant Attorney General Makan Delrahim noted that over one-third of the Antitrust Division’s open investigations relate to public procurement and there were a number of ongoing grand jury investigations.
The Procurement Collusion Strike Force is also looking closely at bidding relating to the ongoing COVID-19 pandemic. The Antitrust Division, as well as many other parts of DOJ, have made it clear that it will monitor and investigate any signs of collusion or corruption relating to the ongoing global health crisis.
In addition to bringing antitrust charges, we expect that future government procurement cases could also lead to civil actions under Section 4A of the Clayton Act, which allows the government to recover treble damages for antitrust violations when the government itself is the victim and False Claims Act suits for knowingly submitting false claims to the government.
We expect that this is just the beginning for what looks to be an active time for the Procurement Collusion Strike Force, and will continue to monitor developments in this area.