The federal government this week deemed FedBid, a politically connected reverse auction firm, “ineligible” for new government contracts months after a scandal laid bare how the company tried to destroy the reputation of a senior Veterans Affairs official who ruled against it.
The government’s online list of excluded companies cited FedBid for “a lack of business integrity.”
The move, made official on Monday, comes as the Air Force proposes to debar the contractor, which means FedBid is not allowed to win any new contracts until a final decision is made.
“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 [inspector general’s] report,” said Joe Jordan, FedBid’s new chief executive officer.
That inspector general’s report found that FedBid and several of its senior executives had used insider connections, political allies and even members of Congress to pressure a VA procurement official who had placed a moratorium on reverse auctions at the agency.
The company has also been the subject of a series of articles by The Washington Times about congressional interference on behalf of the company, as well as internal emails raising concerns that using the firm might have allowed potentially counterfeit and stolen surgical items to reach VA operating rooms.
The VA has already banned its procurement officers from using the company.
Last week FedBid split its public and commercial sectors off into separate companies, naming Mr. Jordan to oversee its federal business.
Mr. Jordan, who was not named in the inspector general’s report, said he already had implemented an ethics program for all employees, advisers and directors. An internal review by an outside law firm turned up no evidence of any illegal conduct by the company, according to Mr. Jordan.
Some had expected FedBid to emerge from the scandal unscathed. Not long after the inspector general report, the Washington Business Journal ran a story headlined “Procurement fraud or not, here’s why FedBid won’t get barred from federal contracting,” which quoted several industry experts who said they didn’t expect a suspension or debarment.
The notice posted this week on sam.gov — an online repository of all suspended or debarred contractors — doesn’t say how long FedBid is barred from contracts. But it does state that agencies should not solicit offers from, award contracts to or place new orders with FedBid unless an agency head puts in writing a “compelling reason” to do so.
Emails obtained by The Times from the VA scandal show contracting official Jan Frye thought FedBid was using undue influence to try to keep government business intact. He wrote that he was “receiving a lot of political pressure because two Washington billionaires have invested heavily,” citing Ted Leonsis and Steve Case.
While Mr. Case was directly involved in efforts to get the VA to resume doing business with FedBid, Mr. Leonsis was not mentioned in the inspector general report.
The company put other powerful allies to work on its behalf as well, including former Army Chief of Staff Gen. George W. Casey Jr., who lobbied then-VA Secretary Eric K. Shinseki to overturn Mr. Frye’s moratorium.
Mr. Frye had put a stop to the reverse auctions at the VA as suppliers reported concerns about costs, oversight and “gray market” surgical items entering into the VA supply chain, according to internal emails.
“Need to assassinate his character and discredit him,” one FedBid official said in a memo uncovered later by the VA inspector general, referring to Mr. Frye.
• Jim McElhatton can be reached at jmcelhatton@washingtontimes.com.
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