Time for OFPP to weigh in on use of reverse auctions

An interesting bid protest decision flew under the radar that signals yet another challenge to FedBid, the reverse auction contractor.

By the way, it’s growing ever more doubtful that FedBid will receive any “punishment” for its role in the Veterans Affairs contracting scandal involving Susan Taylor.

An expert source on how suspension and debarment says vendors, generally speaking, can’t be punished for alleged crimes of the past if they have made changes in the present. So the government tends not to go after companies with S&D if there is no evidence of an existing threat to agencies procurement actions.

A recent search on the System for Award Management (SAM) doesn’t list FedBid in the excluded parties list.

But still the company remains under the microscope. The latest challenge to FedBid comes from a bid protest sustained by the Government Accountability Office on Nov. 26. In that decision, GAO found the Interior Department in using the FedBid reverse auction platform to buy $14 million worth of gym equipment under a small business set-aside didn’t follow the procurement regulations because it didn’t refer a finding of non-responsibility of one of the bidders to the Small Business Administration.

But where FedBid comes under fire is GAO found that when FedBid suspended the protester’s account, it was making a de-facto non-responsibility determination for the agency.

A procurement expert, who requested anonymity, said FedBid was acting in the agency’s stead.

Now Interior’s contracting officer told GAO that FedBid’s finding didn’t impact the award decision. While that may be true, it’s hard to imagine that the contracting officer could make a fair determination when FedBid is basically running the procurement and tells its customer that one of the bidders has a low past performance rating because of “late delivery” and was “unresponsive to [a] buyer[‘s] request.”

Raul Espinosa, an attorney for FitNet, the protester, and commissioner of Fairness in Procurement (FPA), a self-described think tank, said in a release this was the second time GAO found FedBid acting in a role that should only be reserved for the contracting officer.

Espinosa also highlighted GAO’s sustainment of a July 2014 bid protest by Aerosage for automobile fuel where FedBid also was acting as an agent of the government.

“The legal implications of both GAO decisions are huge,” said Scott Amey, the general counsel of the Project on Government Oversight (POGO), in the FPA release. “The FedBid and AeroSage GAO decisions will encourage IGs to investigate the FedBid rules and practices.”

In both cases, however, there is no evidence that FedBid did anything improper or illegal, but the issue is how much control the government is giving up to the vendor.

Both of these cases highlight the struggles agencies are having in using the reverse auctions in government, and the need for the Office of Federal Procurement Policy to issue guidance is growing.

Espinosa wrote in the release that FPA Think Tank told Congress in earlier this year, “Reverse-auctions are the future of government contracting as far as commodities are concerned,” however, “the FedBid rules allow government buyers to allegedly rig solicitations; discriminate against sellers; circumvent the regulations; restrict competition; offer preferential treatment and control trade.”

While GAO didn’t come to the same conclusions as FPA or POGO, the fact remains that as more agencies use reverse auctions — whether FedBid or the General Services Administration’s or other vendor offerings — the lack of standards will continue to cause heartburn in the acquisition community.

This post is part of Jason Miller’s Inside the Reporter’s Notebook feature. Read more from this edition of Jason’s Notebook.

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