ITO Möbel Transport and Birkart Globistics: The Rate Was Fixed Before the Bid

ITO Möbel Transport agreed to pay $150,000 and Birkart Globistics $222,146 over alleged bid rigging on Department of Defense household-goods moves. The alleged scheme started with the companies doing the packing, unpacking and port work in Germany. According to the allegations, they agreed on a minimum charge, then instructed American freight forwarders to bid at elevated prices. The government was buying through a bidding process whose prices, according to the Justice Department, had already been arranged.

The Department of Justice announced the two False Claims Act settlements on June 23, 2009. Whistleblowers from the German moving business and an American forwarding company had brought the underlying cases. Their positions on different sides of the same service chain are part of what makes this case useful to someone who knows the rates from the inside.

What the German Movers Supplied

ITO and Birkart were German subcontractors transporting household goods belonging to military and civilian Department of Defense personnel. American freight forwarding firms used them for the German portion of the work. The services covered by the alleged agreement included packing, unpacking and work at German ports.

The company submitting a bid to the military was buying services from other companies to carry out the move. The alleged arrangement connected them: the suppliers agreed on the rates they would charge, and the American forwarders submitted bids at the levels the conspirators instructed.

The government’s account therefore reaches beyond the names on the bids. It follows the price back to the businesses handling the goods. For someone working in moving operations or forwarding, that is a familiar place to look: what the subcontractor charged, who set that charge and how it reached the customer’s price.

What Is an Example of Bid Rigging?

The ITO and Birkart case is an example of alleged bid rigging through a written supplier-rate agreement and coordinated government bids. The Justice Department alleged that in November 2000, Gosselin Worldwide Moving and four German moving companies, including ITO and Birkart, agreed to raise their packing, unpacking and port-service rates. The agreement also said none of the participating companies would do the work for less than the agreed rate.

That last provision gave the arrangement its force. A forwarder seeking a lower price from another participant would encounter the same agreed floor. The alleged agreement removed the cheaper offer before the government saw a bid.

The Justice Department alleged that American forwarders submitted bids at specific elevated levels, following the conspirators’ instructions, and won transportation contracts on those noncompetitive bids. It alleged that the Department of Defense overpaid for contracts beginning in 2001 and continuing at least through 2002. In that account, taxpayers paid for the loss of competition inside the moving chain.

The price fixing set the German suppliers’ charges. The bid rigging carried coordinated prices into the military’s procurement. Looking only at the final bids would leave out the agreement that helped determine what those bids would be.

ITO Birkart Military Moving FCA Settlements

ITO and Birkart each agreed to a separate payment to settle the False Claims Act allegations. Both also agreed to cooperate with the government as it pursued claims against the remaining defendants.

Cooperation mattered in a case built around an agreement among businesses occupying different positions in the same transaction. The supplier side could explain the agreed charges, while the forwarder side connected those charges and the bidding instructions to the government’s contracts.

The broader moving-company cases also examined how low bids were removed and how the resulting work generated requests for government payment.

How Low Moving Bids Were Removed

The related criminal indictment against Gosselin alleged a way to defeat the military’s rate-matching process. The military published the lowest filed moving rates and allowed competing forwarders to match them. According to the indictment, the scheme induced cancellation of low rates and prevented matching, raising the government’s final rates for household moves from Germany to the United States.

The low offer was the opportunity for another forwarder to compete at that price. Removing it and blocking matching attacked that opportunity directly.

The Justice Department’s separate Pasha settlement announcement alleged that Gosselin and The Pasha Group induced two American forwarders to cancel low bids and others to submit higher bids under threat of a boycott. The government paid for the moves between Europe and the United States. The Pasha Group paid $13 million to settle.

These accounts give an insider something concrete to recognize: instructions about which rates could remain available, pressure to withdraw a low offer and directions to submit a higher one. The subcontract price and the decision to keep a competing bid out belong in the same account of how the government came to pay more.

What Is the Role of Whistleblowers in Bid Rigging Cases?

Whistleblowers brought the alleged moving conspiracy to the government’s attention through two qui tam cases under the False Claims Act. Two people who worked with a German moving company brought one case. The owner of an American freight forwarding company brought the other. The Justice Department said it joined the two cases over the rate agreement.

Those roles span the commercial relationship at the center of the allegations. One side knew the German moving business. The other knew the American forwarding business that submitted bids to the military. The whistleblowers’ place in that chain helps explain why industry knowledge matters: the person who understands a supplier’s pricing may see a decision that is invisible in the government’s final bid comparison.

The same is true of a cancellation. A price list can show that a rate disappeared. Someone who received the instruction to withdraw it may be able to explain who wanted it removed and why. Our whistleblower experts connect the rate-withdrawal instruction with the moving bids and resulting payments.

The Records Behind the Bid Pattern

An insider’s records can connect an agreed supplier rate to the forwarder’s bid and the government’s payment. That connection gives a suspicious pricing pattern a business explanation: who made the decision and how the companies carried it out.

Applied to military moving, that means understanding the relationship between the German service rate, a forwarder’s pricing instructions and the bid that reached the Department of Defense. We examine how rate sheets, communications, bids and billing records fit together. A person who knows why the company changed a rate or withdrew an offer can explain a decision that the numbers alone cannot.

False Invoices in the Gosselin Case

The related Gosselin False Claims Act litigation shows why the billing records belong beside the rate agreement. In its December 2013 decision, the Fourth Circuit directed a $24 million civil penalty judgment on a whistleblower’s claim involving 9,136 false invoices, reversing the earlier decision to impose no penalty.

The judgment connects collusive pricing to the claims submitted for payment. The rate agreement explains how the price was arranged. The invoices show the government being asked to pay for the work. Both parts matter when we assess a government-contract bid-rigging case with an insider.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The Pasha settlement provides an actual award example from the moving cases: the Justice Department announced $2.6 million collectively for the whistleblowers in that settlement.

You Know Who Set the Rate

Our whistleblower experts can examine why a military-moving rate was raised or withdrawn and how the change reached the government’s invoice.