FedBid, founder hit with Air Force suspension

Reverse auction provider FedBid Inc. and its founder Ali Saadat have been suspended by the Air Force as the service considers whether to debar the company.

The company ran afoul of the Veteran Affairs whose its inspector general released two reports in September criticizing the company’s practices and the effectiveness of its reverse auctions. The reports also described how a VA official allegedly was pressuring others in the agency to use FedBid.

“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,” said FedBid’s CEO Joe Jordan in a statement the company released.

The company recently split into organizations with Jordan taking control of the government business and Saadat running the commercial business.

The problems the VA IG detailed stemmed from activities between 2010 and 2013. The company has taken several steps since then, which it detailed in its statements.

Those actions included bringing in an outside counsel to conduct an independent review. That review found issues with the culture at FedBid, particularly how certain employees handled third-party relationships, the company said in its statement.

The outside counsel, the Arnold & Porter law firm, recommended that the company create a stronger ethics and compliance program for all employees and increase training.

The company also has restructured, separating its commercial business from its federal business.

The suspension filing on the System for Award Management doesn’t include specific allegations against the company. In a long legalistic paragraph, the Air Force basically calls FedBid a dishonest contractor. The entry for Saadat is essentially identical.

The action shuts down FedBid’s ability to pursue and win new business as well as win extensions of current contracts.

There is no deadline for action, but generally these kinds of suspensions can last a week to several weeks or even months before finally being resolved.

Several companies that have gone through suspensions like this often have to enter into agreements with the government where they will have increased compliance and reporting requirements. When GTSI was suspended several years ago, it was required to hire an outside firm to monitor its activities.

GTSI’s CEO at the time also had to resign.

When MicroTech was suspended, its CEO had to step away from the company for several months.

In the case of both GTSI and MicroTech, neither company ever admitted to any wrongdoing in reaching their settlements with the government.