Air Force suspends, begins debarment process of FedBid

The Air Force has suspended FedBid from federal procurement activity, both new contracts and follow-ons, as of Jan. 26 and proposed the reverse auction company for debarment.

FedBid’s listing in the System for Award Management (SAM) says the Air Force suspended and is proposing debarment with proceedings pending.

The Air Force wrote in the listing on SAM that it deemed FedBid ineligible for new contracts or follow-on deals “based upon adequate evidence of conduct indicating a lack of business honesty or integrity, or a lack of business integrity, or regulation, statute, executive order or other legal authority, pending completion of an investigation and/or legal proceedings.”

“As promised in our previous reporting on VA’s contracting and relationship with FedBid, the OIG referred FedBid to the Interagency Suspension and Debarment Committee for an independent decision whether the company should be debarred. Through the Committee’s processes the Department of the Air Force agreed to be the lead agency,” said an VA OIG spokesperson in an email to Federal News Radio. “The OIG provided the Air Force with copies of our two reports, Review of the Veterans Health Administration’s Use of Reverse Auction Acquisitions (September 26, 2014) and Administrative Investigation – Conduct Prejudicial to the Government and Interference of a VA Official for the Financial Benefit of a Contractor Veterans Health Administration Procurement & Logistics Office ,Washington, DC (September 26, 2014) along with supporting evidence. We believe our diligence investigating and pursuing administrative action through the suspension and debarment process underscores the OIG’s strong commitment to protect taxpayer resources and the integrity of the contracting process.”

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An Air Force spokesperson said by email that the service’s debarring official decided there was enough evidence to suspend FedBid and propose them for debarment.

“FedBid’s conduct was ‘so serious or compelling a nature that it affects its present responsibility [48 CFR 9.406-2(c)],'” the spokesperson said. “A proposed debarment is not a final action, so it would be inappropriate to comment further at this time.”

The news of the Air Force’s decision surprised FedBid officials.

“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 Air Force’s decision to suspend and propose FedBid for debarment is a direct result from the Veterans Affairs Department’s inspector general report in September detailing a tawdry tale of alleged procurement fraud, lies to investigators, retaliations against whistleblowers and misuse of agency resources.

FedBid executives allegedly promised to pressure VA acquisition executive Jan Frye after he suspended the use of reverse auctions twice — once in March 2012 and again in December 2013. The IG found FedBid said it would “‘storm the castle,’ use a ‘heavy-handed- puncher,’ to ‘rally the troops up on the Hill,’ have ‘enough top cover to overwhelm,’ to ‘unleash the hounds,’ to ‘assassinate [Mr. Frye’s] character and discredit him,’ and to keep ‘close hold’ of nonpublic information Ms. [Susan] Taylor provided FedBid executives, as well as repeatedly and falsely tell VA leadership that there was ‘no cost to VA for its use of FedBid,’ all for the ‘indomitable world of FedBid.'”

An email to the Air Force seeking comment on the decision to suspend and submit for debarment FedBid was not immediately returned.

The Air Force’s decision comes as a bit of surprise for several reasons. First, because the IG report came out in September and was in process for the better part of a year, many experts believed the VA would have been the one to suspend them. Many procurement experts said any move to suspend and debar a company usually happens soon after such a damning IG report comes out.

Second, FedBid on Jan. 1 split into two companies, one focusing on federal business and one on commercial business. Jordan was named CEO of the federal business and the executives in the middle of the VA scandal, Ali Saadt, the founder and former CEO of FedBid, took over the commercial company.

FedBid also says it took specific actions to ensure integrity and lawfulness of its business practices, including hiring the law firm Arnold and Porter to assess the situation and make recommendations.

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