House lawmakers call for OFPP to issue reverse auction guidance

House lawmakers are pressing the Office of Federal Procurement Policy to update the Federal Acquisition Regulations to detail how best agencies should use reverse auctions.

Reps. Jeff Miller (R-Fla.) and Sam Graves (R-Mo.), chairmen of the Veterans Affairs and Small Business committees, respectively, wrote to Anne Rung, OFPP administrator, Dec. 4, asking for a FAR case to be opened immediately to address reverse auctions.

“As you may well know, while our two committees recognize that reverse auctions, when properly used, may deliver savings to the taxpayer, we have long been concerned that some are misusing this tool to evade competition and compliance with other procurement regulations,” Graves and Miller wrote in the letter obtained by Federal News Radio.

Graves and Miller highlight findings from the December 2013 report from Government Accountability Office as well as recent GAO bid protest decisions detailing agency struggles with reverse auctions.

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[N]early a year has passed [since the GAO report] without any guidance being issued or regulation proposed,” the lawmakers wrote. “Each day that passes only further undermines the integrity of the procurement system and exposes the American taxpayer to unnecessary waste.”

GAO reviewed the use of reverse auctions by four agencies — the Army, the departments of Homeland Security, Interior and Veterans Affairs — and found while the use of this tool tripled between 2008 and 2012, the agencies didn’t competitively bid more than one-third of the contracts in fiscal 2012.

Additionally, two GAO bid protest decisions — one from November and another from July — highlight mistakes agencies continue to make in using this tool. Both of the bid protests focused on the agency’s use of FedBid’s reverse auction tool.

Joe Jordan a former OFPP administrator and now president of FedBid’s public sector business, said there is enough evidence that shows reverse auctions promote competition and cost savings.

“The fact is, there are certain vendors with high-margin contracts that would prefer the status quo, rather than allow agencies to make the best decisions for their organizations that save time and taxpayer dollars,” Jordan said in an email to Federal News Radio. “Numerous reports, including a March 2014 analysis by Gartner, Inc., of e-sourcing best practices that drive savings and the 2011 IBM Center for the Business of Government study, have demonstrated the quantifiable benefits of using reverse auctions.”

GAO recommended in its December 2013 report that OFPP amend the FAR, issue guidance and disseminate best practices around reverse auctions.

OMB told GAO that it “generally agreed” with their recommendations and “agreed that FAR coverage should be considered.”

Yet a year after the report, Graves and Miller say there still are too many examples of agencies improperly using reverse auctions.

“[D]espite the fact that the U.S. Army Corps of Engineers demonstrated that reverse auctions are not suitable for construction service contracts, and that OFPP stated that construction services should not be treated as commercial items, agencies continue to use reverse auctions to purchase construction services,” the letter stated. “Likewise, we continue to receive reports of reverse auctions being conducted where a commercial reverse auction providers shares past performance and financial responsibility information with the contracting officer, but that information is not provided to the offeror nor referred to the Small Business Administration in violation of the FAR.”

Jordan said FedBid supports the need for OFPP policy or regulations.

“We strongly support any steps taken that would increase the tools available to procurement officers to make the best, most informed decisions for their organization,” he said.

Concerns about reverse auctions aren’t new. VA’s suspension of reverse auctions in December 2013 continues to be in place. And most recently, VA’s inspector general in September found a former senior executive and executives at FedBid embroiled in a tail of alleged procurement fraud, lying to investigators, retaliating against whistleblowers and misusing agency resources.

An email to OMB seeking comment on the letter was not immediately returned.

RELATED STORIES:

Savings from reverse auctions not being maximized

Time for OFPP to weigh in on use of reverse auctions

VA puts reverse auctions on hiatus again to study value proposition.

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