Air Force reinstates FedBid

Negotiated agreement means the reverse auction provider, suspended late last month, can resume federal business now that Chairman Ali Saadat has resigned.

FedBid logo.

After almost four weeks on idle, reverse auction provider FedBid can take on new federal business and service existing customers after signing an administrative agreement that stopped the Air Force's debarment proceedings against the company.

As part of the agreement, FedBid founder and board Chairman Ali Saadat resigned and is no longer affiliated with the company, a FedBid spokesman said. Saadat still owns roughly one-third of FedBid's outstanding shares, according to the agreement, but on Feb. 12 he "entered into an irrevocable Proxy and Voting Agreement, limiting his influence over FedBid."

FedBid said Air Force officials notified the firm on Feb. 20 that it had removed the company from the Excluded Parties List System and that the company is no longer suspended or facing debarment proceedings.

The Air Force action came approximately a week after a teleconference involving Air Force officials, FedBid CEO Joe Jordan and the firm's counsel. Two days later, according to the administrative agreement, Saadat agreed to cut all ties with the company. He had already resigned as chairman on Feb. 5, according to a statement the company released Feb. 23.

The agreement stipulates that Saadat have no control or influence over day-to-day or long-term operations or management of the company. "He has no role with FedBid and is not employed at the company," a FedBid spokesman said.

Saadat remains affiliated with a separate company spun out of FedBid in late January, according to the spokesman. That as-yet unnamed firm will be focused on providing services to private sector firms, while FedBid, headed up by Jordan, will continue to address the federal market exclusively.

In late January, the Air Force began taking steps to stop FedBid from participating in the federal procurement process, fallout from a scathing Veterans Affairs Department inspector general report on the company released in September. The report castigated Susan Taylor, deputy chief procurement officer at the Veterans Health Administration, for allegedly engaging "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."

FedBid has been moving on a number of fronts to address the IG's concerns, including implementing the federal/private sector split, appointing a special committee to examine responses or actions the company should take related to the report, initiating an independent review of employees' actions, implementing code of conduct certification overseen by an in-house compliance officer, a 24-hour ethics hotline, and other steps.

"We appreciate U.S. Air Force officials moving expeditiously on their review and consideration," Jordan said in a Feb. 23 statement. "Through that process, FedBid was able to demonstrate that we took seriously their concerns and that we have taken substantive actions to address those concerns. We will continue to work with USAF, within the terms of our administrative agreement, to ensure the highest possible commitment to the integrity and transparency of our operations and our entire FedBid team."

In a statement provided to FCW on Feb. 23 in response to a question about the impact of the proceedings, the company said "there has obviously been a short-term impact on the business financially. However long-term, we believe the steps that FedBid has taken over the last six months, many of which were critical in addressing USAF's concerns, actually provide a stronger foundation for the company's long-term growth. "

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