DOJ Procurement Collusion Strike Force Secures First Jury Verdict
On February 1, a North Carolina jury found Brent Brewbaker, a former executive of Contech Engineered Solutions LLC (Contech), guilty of criminal antitrust and fraud charges arising out of his involvement in rigging bids for aluminum structure projects that were submitted to the North Carolina Department of Transportation (NCDOT). Specifically, the jury found Brewbaker guilty on all six charged counts: conspiracy to rig bids, conspiracy to commit mail or wire fraud, three counts of mail fraud, and one count of wire fraud. Brewbaker is scheduled to be sentenced on April 12 and could face a maximum of 10 years in prison for the bid-rigging charge and 20 years for each of the other counts. On February 8, US District Court Judge Louise Flanagan denied Brewbaker’s motion for acquittal, holding that the government brought sufficient evidence to support his conviction.
The Brewbaker guilty verdict marks an important milestone for the Procurement Collusion Strike Force (PCSF or Strike Force), which is credited with spearheading the investigation, as it is the Strike Force’s first jury trial since its inception in November 2019. The Strike Force is tasked with detecting, investigating, prosecuting, and deterring antitrust crimes such as bid-rigging and related fraudulent schemes in the grant, government procurement, and program funding areas. It has been responsible for numerous indictments and plea agreements and millions of dollars in restitution. Arnold & Porter wrote about the Strike Force when it was first created and has been keeping track of its developments over the past year.
Brewbaker’s name may sound familiar to readers of Enforcement Edge because we previously wrote about the PCSF’s investigation into Contech. In October 2020, the government indicted Brewbaker and Contech on charges of conspiring to rig bids for aluminum structure projects that were submitted to the NCDOT between 2009 through 2018. DOJ alleged that Contech and Brewbaker coordinated with a dealer for Contech products to submit bids to NCDOT that were intentionally higher than the dealer’s bid. Brewbaker and Contech also allegedly submitted false and fraudulent certifications that the quote was submitted competitively. Because Contech supplied aluminum pieces to the dealer, it benefited from the sales to the NCDOT.
In May 2021, Contech pleaded guilty to one count of bid-rigging and one count of conspiracy to commit mail and wire fraud. Under the terms of its plea agreement, Contech paid a $7 million criminal fine and more than $1.5 million in restitution to the NCDOT. The plea deal also required Contech to cooperate with the PCSF’s ongoing investigation into the bid-rigging scheme.
A New Tool for the Strike Force
In announcing the verdict, Assistant Attorney General Kanter reiterated the Antitrust Division’s focus on procurement fraud, cautioning companies managing infrastructure projects that “the Justice Department and its Procurement Collusion Strike Force partners will have their eyes out for cheaters and schemers” and that the Division plans on “hold[ing] accountable executives who target state and local governments with their bid-rigging and fraud schemes.” Arnold & Porter attorneys recently spoke about DOJ’s focus on procurement collusion in our Antitrust 2021 Year in Review: Criminal Enforcement.
Brewbaker’s conviction on wire and mail fraud charges likely will embolden the PCSF to continue to pursue such charges when it is able to do so. Government procurement regulations, such as the Federal Acquisition Regulation (FAR), often require bidders to submit certifications attesting to non-collusion either online or through the mail. As a result, false or fraudulent certifications can form the basis of mail and wire fraud charges. Defendants convicted of mail or wire fraud face the possibility of 20 years in prison for each count.
As the Strike Force and DOJ look more closely at procurement fraud and collusion in government contracting, it is incumbent upon companies to review and revise their practices to meet their legal obligations. These measures may include instituting and utilizing robust compliance policies and coordinating training focused on avoiding anticompetitive conduct and ensuring procurement integrity in connection with the bidding process.
For questions about the Procurement Collusion Strike Force and the Antitrust Division’s focus on anticompetitive behavior in the government contracts sphere, reach out to the authors or any of their colleagues in Arnold & Porter’s Antitrust/Competition, Anti-Corruption, White Collar Defense & Investigations, or Government Contracts practice groups.
© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.