Imagine this: The Department of Justice is investigating one of your company’s high-tech classified contracts with an intelligence agency for alleged bid rigging, and the investigation has implicated classified documents via a broad grand jury subpoena.
Your records of customer communications, teaming negotiations, and internal deliberations about whether and how your company should bid, are stored on the high side (i.e., the classified system), given the classified nature of the contract. Even minor details, such as the name and description of the contract, are classified.
That makes complying with the subpoenas more challenging, and potentially impedes your defense efforts, because the rationale for your teaming and bidding decisions are shrouded in classified secrecy.
Further complicating matters, the DOJ requests interviews with company employees, including employees with top-secret clearances, while the customer instructs your company not to reveal classified information.
This situation presents several risks and pitfalls. How do contractors comply with demands for information while safeguarding classified materials? How should counsel engage with company employees on classified topics? How can contractors manage their relationships with the agencies ahead of time to ensure minimal disruptions to other procurements?
The answers lie in tailoring an approach to complying and even cooperating with DOJ investigations. Your goal is to protect sensitive information and handle company employees who might become witnesses with care, while maintaining strong relationships with intelligence agency customers.
Below are some best practices for government contractors and their counsel facing similar challenges.
Ensure Proper Involvement
When classified information is implicated in an antitrust investigation, make sure the DOJ’s National Security Division has visibility and an opportunity for involvement. While the Antitrust Division typically leads such investigations, the NSD can play a pivotal role in safeguarding national security interests during the investigation.
The NSD was created to strengthen coordination between prosecutors, law enforcement agencies, intelligence attorneys, and the broader intelligence community. Its involvement ensures that any classified materials are handled appropriately, minimizing the risk of improper disclosure or mishandling.
Contractors should raise concerns about classified information with the Antitrust Division and seek disclosure to the NSD, advocating for procedures that protect sensitive materials while enabling the investigation to proceed.
This includes ensuring all involved DOJ personnel and defense counsel have appropriate security clearances, and that a sensitive compartmented information facility, or SCIF, is available for reviewing documents, conducting interviews, and holding meetings to discuss the case.
Proactively Manage Relationships
Contractors under investigation typically have ongoing projects with the intelligence community and are pursuing future bids actively. Given these relationships, contractors should apprise customers of the investigation and its progress.
The customer likely will defer to the DOJ as the antitrust experts and serve as an important source of information about the specifics of the procurement, the bidding process, and the competitive landscape. As in any customer relationship, there are benefits to providing the customer with information to avoid surprises that could damage the company’s reputation and jeopardize future opportunities.
However, this communication must be carefully managed:
Inform, but don’t interfere. While the customer should be made aware of the investigation and provided context, contractors should avoid any appearance of trying to influence the investigation through the customer. Such an effort could make customer personnel uncomfortable, and the DOJ could view it as an attempt to obstruct or interfere.
Anticipate tension. There often is an inherent tension between the intelligence agency’s desire to protect classified information and the DOJ’s need to access all materials relevant to the investigation. Contractors must navigate this tension carefully so both sides are aware of the constraints and are cooperating to find workable solutions. Early identification of the relevant information and documents can help alleviate tension.
Minimize blowback. Developing an effective customer engagement strategy is essential.Identify the customer clients to contact, keep apprised of the investigation, and determine the appropriate level of information to share.
Contractors should emphasize their commitment to compliance while reinforcing their value as trusted partners to the agency’s mission. This can help mitigate reputational damage and maintain the company’s standing.
Careful, Delicate Engagement
DOJ investigations usually require interviews with employees, particularly senior decision-makers and those directly involved in the procurement process. In cases involving classified contracts, these employees often are highly skilled professionals with valuable security clearances, making their retention critical to company operations.
Such employees can present unique challenges, given their instinctive devotion to the customers’ mission (which may involve less sensitivity to antitrust guardrails) and because they are trained to keep secrets and may hesitate to share information for fear of exposing classified material.
To navigate employee interactions effectively:
Prepare, don’t scare. When preparing employees for interviews with DOJ investigators, contractors should strike a delicate balance. Employees should understand the seriousness of the investigation but shouldn’t feel intimidated or fear for their careers.
Be sensitive to confidentiality constraints and concerns: Employees will find it easier to cooperate if they’re confident that information gathering is consistent with the their duties to safeguard sensitive materials.
Propose to conduct initial interviews in a SCIF. Review documents, as needed, in protected environments. Take guidance from them on respecting code names and other customer-driven information protocols.
Security-Cleared Counsel
Handling classified materials during an antitrust investigation requires specialized expertise. A cross-functional team of antitrust and government contracts attorneys may be required to ensure proper handling of classified materials.
Certain law firms have lawyers with appropriate security clearances and expertise, ensuring they can review key materials, interview employees, and represent the company effectively.
Classified documents may contain evidence supporting the company’s defense. Security-cleared counsel can identify and present this information to DOJ investigators while ensuring compliance with national security protocols.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Author Information
Michelle Coleman is a partner with Crowell & Moring’s government contracts group.
Lauren Fleming is counsel at Crowell & Moring and a member of its antitrust and competition group.
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