WHY CONTRACTORS SHOULD PAY ATTENTION TO THE FEDERAL TRADE COMMISSION
Companies selling to the government already have an array of oversight and compliance agencies that enforce an ever-growing number of procurement regulations. Contractors should add the Federal Trade Commission (FTC) to that list as the agency becomes an increasingly activist organization. Two specific areas where the FTC is, or soon will be, turning its attention to issues involving government contractors are the use of noncompete agreements (NCA’s) and the weaponization of the False Claims Act to punish contractors that over-hype the capabilities of their solutions. Earlier this year the FTC issued a broad Notice of Proposed Rulemaking, which many believe essentially bans noncompete clauses and invokes its statutory authority to categorize NCA’s as an “unfair method of competition.” The proposed rule even extends the non-compete prohibition to outside independent contractors. An article in Bloomberg Government also stated that the FTC recently announced that it will pursue outsized and unfounded” claims companies make about the capabilities of the solutions they offer. While the specific circumstance covered artificial intelligence, any contractor statement could fall under the same scrutiny. The current FTC is using a very broad definition of business behavior that they suspect of being anti-competitive. While the most obvious example of this is the slew of mergers they’ve either rejected or may reject, the agency’s current priorities absolutely do extend to oversight of government contractors. The agency has previously pursued associations when even suspect claims of anti-competitive behavior have been leveled. Like all government investigations, it takes time and resources to combat even specious allegations. Contractors should definitely add the actions of the FTC to the oversight agencies they have on their federal business radar.