As previously discussed on this blog, in February a North Carolina jury found Brent Brewbaker, a former executive of Contech Engineered Solutions LLC, guilty of antitrust and fraud charges arising out of his involvement in rigging bids for projects that were submitted to the North Carolina Department of Transportation. The case was the first jury trial spearheaded by the DOJ's Procurement Collusion Strike Force (PCSF or Strike Force) since its inception in 2019.
Earlier this month, US District Judge Louise W. Flanagan sentenced Brewbaker to 18 months in prison on each count of the antitrust and fraud charges, to be served concurrently. He faced a maximum sentence of 10 years in prison for the conspiracy to rig bids count and 20 years for each of the other counts: one count of conspiracy to commit mail or wire fraud, three counts of mail fraud, and one count of wire fraud. Brewbaker also is required to pay $111,600 in fines and serve a two-year term of supervised release. Contech was ordered to pay a $7 million criminal fine and more than $1.5 million in restitution after it pleaded guilty to one count of conspiracy to rig bids and one count of conspiracy to commit mail and wire fraud in connection with the same scheme as Mr. Brewbaker last year.
Takeaways
This sentence marks a victory for the Antitrust Division, which has suffered trial losses in other recent cases. In announcing the sentence, Assistant Attorney General Jonathan Kanter commented that the sentence "reflects the seriousness of offenses that subvert the competitive process, target state and local governments, and ultimately cost taxpayers money." He further commented that "[t]he division and its Procurement Collusion Strike Force (PCSF) partners remain committed to holding executives accountable when they choose to cheat instead of compete."
In light of anticipated government spending under the Inflation Reduction Act, Infrastructure Investment and Jobs Act and the CARES Act, the PCSF is expected to be active and aggressive in pursuing collusion and fraud in government procurement. Brewbaker's conviction will embolden the PCSF to continue to pursue conduct outside of traditional antitrust, such as fraud and false statements in bidding documents.
Steps To Avoid Trouble
The potential for stepped-up enforcement of antitrust and related laws against companies operating in the government procurement space will require companies to update their compliance programs to manage the heightened risk. These measures may include instituting and utilizing robust compliance policies and procedures; coordinating training targeted towards avoiding anticompetitive conduct and ensuring procurement integrity in connection with the bidding process; and continually auditing and monitoring the efficacy of the program.
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