Last month, the Department of Justice (DOJ) announced that a Florida grand jury indicted three men for conspiring to rig bids for customized promotional products to the U.S. Army and charged two of them with conspiring to defraud the United States. Bid rigging is how conspiring competitors effectively raise prices where purchasers — often federal, state, or local governments — acquire goods or services by soliciting competing bids.
According to the indictment, Lawrence O’Brien, Bruce LaRoche and Thomas Dailey each own companies that sell promotional products to the Army, such as backpacks, water bottles, hats and knives, which feature the logos and insignias of military units. The Army considers these purchases important to its recruitment and retention of service members.
The indictment alleges that between July 2014 and December 2019, the three men conspired to eliminate competition among their companies by sharing their bids, pre-arranging the winner, and submitting bids on each other’s behalf. The indictment also alleges that O’Brien and LaRoche defrauded the government by setting up shell companies to submit sham bids to make the procurement process seem competitive.
All three men are charged with violating Section 1 of the Sherman Act, which bars unreasonable agreements to restrain trade. The maximum penalty for that charge is ten years in prison and a $1 million criminal fine. LaRoche and O’Brien also face separate charges of conspiracy to defraud the United States, which carry a maximum penalty of five years in prison and a $250,000 criminal fine.
Assistant Attorney General Jonathan Kanter, head of the DOJ’s Antitrust Division, noted that the case is part of an ongoing inter-agency effort called the Procurement Collusion Strike Force (PCSF) aimed at combating antitrust crimes and related fraudulent schemes that impact government procurement at all levels of government. Launched in 2019 and expanded in fall 2020, the PCSF is comprised of the Antitrust Division of the DOJ, multiple U.S. Attorneys’ Offices around the country, the Federal Bureau of Investigation, and the Inspectors General for numerous federal agencies.
“Bid-rigging and fraud schemes targeting the military will not be tolerated — they are an affront to competition and the American taxpayer,” Kanter said in a DOJ statement. “Consistent with a whole-of-government approach, the Antitrust Division will continue working closely with our law enforcement partners and Procurement Collusion Strike Force to protect taxpayer funds from collusion and fraud.”
The indictment highlights DOJ’s continued enforcement efforts on government contractors amid heightened antitrust focus. For more information on the PCSF or questions on compliance efforts and tips to guard against antitrust violations, please contact the author at toverman@bassberry.com.
The author would like to thank our law clerk Allison Moors for her valuable contributions to this article.