Air Force moves to debar FedBid

The action was sparked by a 2014 Department of Veterans Affairs inspector general investigation.

Shutterstock image (Nejron Photo): a judge's gavel being swung down.

The Air Force has taken the first steps to stop reverse auction provider FedBid from participating in the federal procurement process, as the fallout from a scathing September Veterans Affairs Department inspector general report on the company continues.

On Jan. 26, the Air Force suspended and moved to debar FedBid from providing reverse auctions for federal agencies contracts, on the grounds that there was "adequate evidence" of a "lack of business honesty or integrity" at the company.

FedBid officials responded that the company was "disappointed" by the action. Its top official underscored that the company had worked quickly and diligently to address the concerns raised in the September 2014 IG report.

"While we are disappointed by this action, we have reached out to officials at the Air Force and are cooperating fully with their ongoing process, including providing them with details of the significant steps we have taken to address concerns raised in the VA OIG report," FedBid CEO Joe Jordan said in a statement released the evening of Jan. 28.

The IG's report alleged that Susan Taylor, deputy chief procurement officer at the Veterans Health Administration, engaged "in conduct prejudicial to the government when she pressured contracting staff under her authority to give preference to and award a task order for reverse auction services to FedBid Inc."

In the Jan. 28 statement, Jordan said his company has taken action to address the integrity and transparency concerns the report raised. Most recently, the company split its federal auction and commercial operations into separate companies. FedBid founder and former chief executive Ali Saadat is now head of the private sector business, but remains chairman of the FedBid board, while Jordan was named CEO of the federal side.

Saadat was also suspended by the Air Force while the service considers whether to debar the company.

In his statement, Jordan said in the immediate wake of the report, the company's board of directors appointed a special committee to determine any response or actions the company should take related to the report. 

That committee, said Jordan, retained the law firm Arnold & Porter as outside counsel to conduct an independent review of company employees' actions. That review, Jordan said, found "no legal wrongdoing by FedBid or its employees," though it did raise some concerns about how the company's internal culture dealt with third-party relationships.

Arnold & Porter, Jordan said, provided a set of recommendations on how to address the concerns. The company has also created an ethics and compliance steering committee that includes the chief compliance officer and the CEO, to oversee and implement changes in the company's ethics and compliance program, policies and training.

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