The federal government has barred a fast-growing Northern Virginia contractor with deep ties to the Washington establishment from winning new work because of “conduct indicating a lack of business honesty or integrity.”
The ruling against FedBid comes after a government watchdog report that found the Vienna-based company aggressively went after a Veterans Affairs contracting official who put a halt on one of its contracts. In addition to the immediate exclusion from new government work, the company faces potential debarment, which could prevent it from securing new government work for a significant period and is one of the most serious actions the government can take against a contractor.
Backed by a $25 million investment from AOL founder Steve Case’s venture capital firm, FedBid grew rapidly in recent years, operating Web sites used by contractors to bid on government business. In addition to Case, the company has ties to many key players in Washington. Its chief executive, Joe Jordan, is the former head of the White House’s Office of Federal Procurement Policy, and it counts Washington sports mogul Ted Leonsis and former Army chief of staff retired Gen. George W. Casey Jr. among its directors.
Last year, the company was the subject of an investigation by the Veterans Affairs inspector general, which found that an agency contracting official helped steer a contract to the company. When a more senior VA official became concerned about the contract and put a hold on it, FedBid mounted an aggressive campaign to have the moratorium overturned, the IG found. It concluded that FedBid executives were part of an effort to discredit the VA official who put the hold on the contract and to “unduly influence VA decision makers.”
“Need to assassinate his character and discredit him,” read an e-mail from a top executive in 2012, according to the IG. The firm also vowed to “unleash the hounds” and “take off the gloves” in its “storm the castle” campaign to win back the business.
In a statement, Jordan said the company was “disappointed” by the government’s proposal to ban the company from bidding on new contracts. FedBid can continue to work under its current contracts, officials said.
Company executives have reached out to government officials 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 IG report, Jordan said.
FedBid took the IG’s findings “very seriously,” he said, “acting quickly to bring in outside counsel to conduct a thorough independent review of all matters related to the report.”
The company instituted a stronger ethics and compliance program, he said, and has mandated training for employees and board members.
FedBid has built a thriving business over the past decade helping the government hold what are known as reverse auctions. Through FedBid Web sites, federal contracting officials post solicitations for items such as office supplies, computer equipment or furniture. Companies submit bids for the work and are told through the site whether they are the lowest bidder. If they aren’t the lowest bidder, they can try again with a reduced price, which ultimately should save taxpayer money.
The government’s reliance on reverse auctions has recently exploded, with FedBid leading the way. The company said that from 2007 to last year, the federal government made 131,623 awards through FedBid, totaling $8.2 billion, which represented nearly $1 billion in savings. In 2013 alone, FedBid said, $1.8 billion in government contracts were awarded through its system, saving taxpayers $160 million.
Amrita Jayakumar contributed to this report.