Texas Man Pleads Guilty to Rigging Bids for Healthcare-Related U.S. Air Force Projects

The owner of a storage sales company pleaded guilty to two felony counts for conspiring to rig bids and defraud the U.S. Department of War in connection with the sale of shelving and storage products to the U.S. Air Force to service multiple healthcare facilities, the Justice Department's Antitrust Division announced today.

According to the information and plea agreement filed in the U.S. District Court for the Middle District of Georgia, Eric J. Caddy, 62, of Huntington, Texas, and his co-conspirators submitted collusive bids for multiple healthcare-related projects at Air Force Base Moody in Valdosta, Georgia, including: (1) the Medical Logistics Warehouse Project; (2) the Pharmacy Modernization and Renovation Project; (3) the Veterinary Clinic Project; and (4) the Dental Lab Clinic Project. One of Caddy's co-conspirators instructed Caddy to submit intentionally higher prices for the projects and even provided Caddy with the specific pricing to include on bids for the projects. Caddy then submitted the collusive bids to a prime vendor for the federal government, which in turn submitted the collusive bids to the U.S. Department of War. Caddy and his co-conspirators concealed the bid rigging from the government by having Caddy "re-write" certain bid forms "in [Caddy's] own handwriting" before transmitting them. The projects, which totaled over $1.6 million, were funded through the Defense Logistics Agency's Facilities Maintenance, Repair, and Operations Program. The guilty plea is the first in an ongoing investigation into bid rigging and fraud impacting U.S. military facilities in the United States.

"Defending free and fair competition in healthcare spending is a critical priority for the Antitrust Division, particularly when it affects the U.S. military," said Acting Deputy Assistant Attorney General Daniel Glad of the Justice Department's Antitrust Division. "The Antitrust Division's Procurement Collusion Strike Force and its partners will continue to find and prosecute those who corrupt the competitive process and increase healthcare-related costs in the United States."

"Bid rigging harms taxpayers, honest contractors and all of us who play by the rules, and will not tolerated," said U.S. Attorney William R. "Will" Keyes for the Middle District of Georgia. "The Department of Justice's Antitrust Division has been an invaluable partner in ensuring that competition remains free and fair in the Middle District of Georgia."

"The Air Force Office of Special Investigations remains steadfast in our mission to protect the integrity of Department of War procurement processes and safeguard resources critical to the readiness and welfare of our Airmen," said Special Agent in Charge Derrell Freeman of the Air Force Office of Special Investigations Southeast Field Office. "Bid rigging schemes like this undermine fair competition, inflate costs for essential healthcare infrastructure, and ultimately harm the brave men and women serving in our military. Working alongside our partners at the Antitrust Division, DCIS, and DLA OIG, we will continue to vigorously investigate and hold accountable those who seek to defraud the United States."

"Bid rigging involving military healthcare contracts isn't just illegal, it's a direct betrayal of the service members and their families who rely on these facilities," said Special Agent-in-Charge Jason Sargenski, Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) Southeast Field Office. "Today's guilty plea sends a clear message that companies and individuals who cheat the competitive bidding process for contracts that support our nation's defense will be held accountable. DCIS, alongside our partners, remains committed to protecting the public interest and the integrity of the defense contracting process."

The Antitrust Division's Washington Criminal Section, Air Force Office of Special Investigations, Defense Criminal Investigative Service, and Defense Logistics Agency Office of Inspector General investigated the case. Trial Attorneys Daniel Chung and Christian Neumeister of the Antitrust Division's Washington Criminal Section are prosecuting the case, with the assistance of the United States Attorney's Office for the Middle District of Georgia.

The maximum penalty for a conspiracy to rig bids in violation of the Sherman Act for an individual is 10 years in prison and a $1 million criminal fine. The maximum penalty for conspiracy to defraud the United States is five years in prison and a $250,000 criminal fine. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. Caddy is scheduled to be sentenced on June 25. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Justice Department's Procurement Collusion Strike Force (PCSF) is a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government - federal, state and local. To learn more about the PCSF, or to report information on bid rigging, price fixing, market allocation and other anticompetitive conduct related to government spending, go to https://www.justice.gov/procurement-collusion-strike-force.

Whistleblowers who voluntarily report original information about antitrust and related offenses that result in criminal fines or other recoveries of at least $1 million may be eligible to receive a whistleblower reward. Whistleblower awards can range from 15 to 30 percent of the money collected. For more information on the Antitrust Whistleblower Rewards Program, including a link to submit reports, visit https://www.justice.gov/atr/whistleblower-rewards.