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By Nick Wakeman

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Nick Wakeman

FedBid back in business after chairman resigns

After four weeks under a cloud of suspension and proposed debarment, reverse auction firm FedBid has been cleared to restart its federal business.

The Air Force suspended the company on Jan. 26 as it investigated whether the company was a dishonest contractor – the essence of the Air Force’s allegations.

On Friday, the company signed a two-year administrative agreement with the Air Force that included the resignation of FedBid chairman and former CEO Ali Saadat. Saadat, who owns a third of the company, also agreed to several restrictions, including a ban on involvement with day-to-day operations. His ownership rights also are restricted, according to the agreement.

Any relationship he has with FedBid or its wholly owned subsidiary EPS Commerce must be an “arms-length arrangement,” so that he cannot influence or control day-to-day operations or management.

Saadat has also signed a proxy and voting agreement that limits his ability to exercise control over FedBid through his stock ownership.

The restrictions on Saadat will remain in place for the life of the agreement or until he is no longer suspended or proposed for debarment or debarred. Debarment proceedings are still pending against him.

The Air Force decided to take action against FedBid in the wake of a Veteran Affairs inspector general report that accused the company of a variety of misdeeds including getting access to nonpublic information and having a senior VA official promote the use of FedBid.

As part of the agreement with the Air Force, FedBid admits that there is enough evidence to support a debarment by the Air Force.

After the VA report was published in September, FedBid took several steps including establishing a stronger ethics and compliance program and the appointment of a chief compliance officer.

In its investigation, FedBid found no apparent violations of law, but did find issues with the company culture and how FedBid handled third-party relationships.

Now, all employees are trained and must sign the new code of business ethics and conduct. There also is training for all new employees.

The administrative agreement adds several other requirements including hiring a firm to provide independent monitoring and establishing a 24-hour hotline for employees to report concerns.

Managers also will need to meet the requirements of the compliance program as part of their written performance reviews.

The company also has to report to the Air Force any violations of its code of ethics and compliance.

The agreement runs through February of 2017.

Posted by Nick Wakeman on Feb 23, 2015 at 9:30 AM

Reader Comments

Thu, Feb 26, 2015

What company is above reproach today?

Tue, Feb 24, 2015 Phil Fuster Washington, DC


I hope you find yourself well today. I just wanted to note a correction on your article concerning FedBid. I founded FedBid in 1998. Due to the downturn in the Internet investment market (backed originally by Garage Technology Ventures and HIG Capital), we had to sell FedBid to Daston in 2001. Ali Saadat was the founder of Daston, not the founder of FedBid. He just bought my idea and kept it alive. Just wanted to make that correction. I take a lot of pride in having created FedBid (along with Luigi Canali who was my chief technologist) and creating/owning the patent on the SmartProcure Best Value Scoring engine used in the product. He and I went months mapping out the idea before we hired anyone. Anyway, I am at my 10th start-up now and we are creating lots of buzz in the cyber-security world. Thanks for reading my note and have a great day!
Best Regards,

Vice President, Sales
Norse Corporation

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