In an attempt to reduce the level of procurement fraud within Government contracts the US Justice Department have announced the formation of a new unit aimed at deterring, detecting, investigating, and prosecuting procurement-related antitrust crimes such as bid-rigging and price-fixing conspiracies.
In 2006 in response to the national concern of procurement fraud within government contracts, the US government introduced the Procurement Fraud Task Force (PFTF) to tackle this problem. It additionally introduced the International Contract Corruption Task Force (ICCTF) to address procurement fraud and corruption within Defence contracts.
Between 2002 and 2010, the United States government privatized hundreds of functions that were conducted by military personnel in previous contingency operations and, in the process, has spent over $770 billion on private contractors.
The ICCTF also created a Joint Operations Centre, a centralised capability with part of its responsibility to collect and disseminate intelligence to ICCTF agencies, FBI field offices, and the intelligence community at large and initiated proactive intelligence assessments to identify trends and patterns. This structure also facilitated the tasking and coordination of cases and agencies involved.
Between 2004 and 2010, the ICCTF initiated nearly 700 investigations in Afghanistan, Iraq, and Kuwait. In 2010 alone the ICCTF had 273 pending cases. In 2010, the ICCTF has obtained over $47 million in restitution, and $1 million in forfeitures/seizures. After 2012 the capability dissipated.
PROCUREMENT COLLUSION STRIKE FORCE
The Justice Department have announced the formation of a new unit aimed at deterring, detecting, investigating, and prosecuting procurement-related antitrust crimes such as bid-rigging and price-fixing conspiracies.
The Department of Justice (DOJ) confirmed that the Strike Force will train and educate procurement officials nationwide to recognize and report suspicious conduct in procurement, grant and program funding processes. We will aggressively investigate and prosecute those who violate our antitrust laws to cheat the American taxpayer.”
PROCUREMENT FRAUD RISK MITIGATION
In November 2018 and March 2019, the DOJ announced global resolutions of criminal charges and civil claims against five South Korea-based companies arising from a decade-long bid-rigging conspiracy that targeted fuel supply contracts to U.S. military bases in South Korea.
It is clear from examples of the prosecution of South Korean companies of offences that had been going on for years undetected. Bid rigging can be difficult to detect due to the hidden nature of the illicit relationship between colluding companies. It is hoped that this isn’t more than a short term initiative but will reignite the structure and performance of the PFTF and ICCTF.
The scale of the problem in government contracts is unclear however there are many global examples of the breadth of bid rigging and the financial impact.
Is the US response to this through training and investigation enough to mitigate this significant procurement fraud typology? Training procurement staff is a first step in identifying suspected bid rigging however it is only one part of a larger risk mitigation framework.
What is the connection between trained staff and key decision makers in an organisations risk mitigation structure? Generally, law enforcement doesn’t connect with public sector risk mitigation response. How are government agencies and sectors able to profile their procurement fraud and bid rigging risk and what are the gaps in the current risk mitigation framework.
What isn’t clear is the length of time this initiative will be in place, although I am sure bid rigging will be identified and prosecuted will it have a long term impact and will there be a coordinated risk mitigation response.