If passed, the Infrastructure Investment and Jobs Act (IIJA) will create enormous profit opportunities for government contractors. With this increased opportunity, however, comes an increased chance for companies to run afoul of antitrust regulations.
The IIJA is a bipartisan piece of legislation that would invest $550 billion into the improvement and expansion of bridges, rail systems, mass transportation, broadband access, and electric vehicle infrastructure while also creating 2 million jobs each year over a decade. Such projects will necessarily open up massive contracts for construction, planning, engineering, and more.
Contracts like these, however, will be carefully watched for anti-competitive conduct by the U.S. Department of Justice’s new Procurement Collusion Strike Force (PCSF). Based on the recent history of enforcement actions by the PCSF and other parts of the DOJ’s Antitrust Division, former industry insiders suggest there are four key areas where the risk of prosecution for government contractors is the highest:
1. Joint Bidding
Companies that engage in joint bids with potential competitors face more scrutiny than those who bid alone. Collaboration between companies is perfectly legal, and joint bids are as well—but only when they are necessary to achieve the otherwise legitimate and pro-competitive aims of a collaboration. When they are not necessary, joint bids may be found to exist solely to limit competition, as in U.S. v. Gaines, and result in criminal penalties.
2. Dual Distribution
Companies that bid on contracts in direct competition with their dealers or distributors are also in danger of facing criminal sanctions. If a bid is determined to be designed to assist a partner’s bid rather than to itself win the contract, then, like the North Carolina engineering firm, Contech Engineered Solutions, a company can find itself pleading guilty to bid-rigging.
3. Legal Certifications
Many government contracts require that bidding companies certify their eligibility in various ways. When these certifications are inaccurate or falsified, then prosecutions for fraud can ensue. An example of this came earlier this year, when the former owner of a series of construction companies was indicted for falsely certifying in a bid that his business was owned and controlled by a service-disable veteran.
4. Hiring and Compensation
Trade restraints in the labor market can also lead to criminal antitrust charges, as all companies are considered competitors in the employment marketplace. Limiting competition through wage-fixing or no-poach agreements is thus still chargeable as market collusion.
These are just some of the ways a company can find itself facing criminal charges for placing a bid on a government contract. If you or someone you know is under investigation for antitrust violations, contact our team of experienced federal attorneys to find out more.
