Justice Department creates strike force to eliminate federal contract bid rigging

The Justice Department on Tuesday announced a new strike force to prosecute companies that rig bids for government contracts, costing taxpayers billions of dollars.

The Procurement Collusion Strike Force will be comprised of the department’s Antitrust Division, 13 U.S. Attorneys’ Offices, the FBI, and four offices of inspector generals.

“To protect taxpayer dollars, the Justice Department is doing its part to eliminate anticompetitive collusion, waste and abuse from government procurement,” said Deputy Attorney General Jeffrey Rosen.

Bid rigging on government contracts occurs when competitors in the same industry conspire to fix prices on government contracts. Contractors can game the system by colluding to prevent other competitors from entering bids or by both businesses submitting artificially high bids, overcharging the government.

And it can add up. About 40 percent of U.S. government discretionary spending, or about $550 billion, was spent in 2018 on contracts for goods and services, according to the Government Accountability Office.

The Justice Department says more than one-third of the Antitrust Division’s open investigations relate to public procurement or involve a government victim. Those cases range from contracts for construction and disaster recovery projects to food and hardware.

In November 2018, the Justice Department secured guilty pleas from two South Korean companies for their role in a conspiracy. Two other South Korean oil companies pleaded guilty to similar charges this year stemming from the same investigation.

The department this year also announced a guilty plea by the owner of a company who conspired to rig bids at online public auctions of surplus government equipment between 2017 and 2018.

“Criminal antitrust conduct that affects government procurement is a costly problem,” said Makan Delrahim, who heads the department’s Antitrust Division.

The strike force will focus on reaching out to and training government officials to identify antitrust behavior. Department prosecutors will then investigate those crimes and bring charges. Initially, the strike force will focus on 13 districts that are home to various federal, state and local government agencies. Department officials say they expect it will be expanded over time.

The strike force is new, but the Justice Department has started previous initiatives to combat government bid-rigging. In 2008, the antitrust division did a similar outreach to procurement officials in the wake of the financial crisis.