Overview
FAR Subpart 3.3 establishes the policies and procedures for identifying and reporting suspected antitrust violations in government procurement. Its primary purpose is to ensure that the government receives the benefits of free and open competition by deterring practices such as collusive bidding, price-fixing, and market division.
Key Rules
- Mandatory Reporting: Agencies are legally required by 41 U.S.C. 3707 and 10 U.S.C. 3307 to report any bids or proposals that evidence a violation of antitrust laws to the Attorney General.
- Red Flags (Indicators): The FAR identifies specific "behavior patterns" that warrant reporting, including:
- The use of "industry price lists" by supposedly independent contractors.
- A sudden shift from competitive bidding to identical bidding.
- Bid rotation (competitors taking turns being the low bidder).
- Market division (competitors staying within specific geographic areas or product types).
- Joint bids from competitors who both have the individual capacity to perform the work.
- Obvious signs of collusion, such as identical typos or calculation errors across different offers.
- Identical Bids: These must be reported if the agency has a reasonable belief that the identity in pricing resulted from collusion.
- Dual Reporting Paths: Evidence must be referred to both the U.S. Attorney General (DOJ Antitrust Division) and the agency office responsible for contractor debarment and suspension.
Responsibilities
- Contracting Personnel: Act as the "front line" and primary source for investigative leads. They must remain sensitive to unlawful behavior and report evidence in accordance with agency regulations.
- Agencies: Responsible for establishing internal procedures for reporting and ensuring that formal reports to the DOJ include a description of the practice and a point of contact.
- Contracting Officers (COs): For international contracts performed outside the U.S., COs have the discretion to refer suspected collusive offers to the relevant foreign government authorities.
- Assistant Attorney General (Antitrust Division): Receives the formal reports and provides guidance to agencies via telephone regarding reporting requirements.
Practical Implications
- Administrative Consequences: Beyond criminal or civil penalties from the DOJ, a suspected antitrust violation often triggers "Section 9.4" proceedings, which can lead to a contractor being suspended or debarred from government contracting entirely.
- Due Diligence in Evaluation: Contracting Officers cannot simply look at the price; they must look for patterns. For example, if Firm A always wins in Virginia and Firm B always wins in Maryland, even if their prices seem reasonable, a CO must investigate for a potential "Division of the Market" violation.
- Evidence Handling: Because "joint bids" by capable competitors are flagged, firms must be careful when forming Teaming Agreements or Joint Ventures. They must demonstrate a legitimate business or technical need for the partnership to avoid the appearance of a collusive price-estimating system.
- International Reach: Contractors operating overseas are not exempt; the FAR allows for the "export" of these leads to foreign regulators, increasing the legal risk for global entities.