Just weeks after the Air Force suspended a major government contractor for misconduct, officials abandoned their quest to determine whether they should strip the company of its eligibility to contract with federal agencies.
FedBid executives breathed a sigh of relief when the company’s suspension was ended Feb. 20 in an administrative agreement instead of debarment. Among other provisions, the agreement mandated the company sever all ties to Ali Saadat, FedBid’s founder and former CEO, who resigned from his post at the end of last year amid heavy criticism.
The Air Force suspended the embattled contractor Jan. 26 to consider allegations contained in a Department of Veterans Affairs Inspector General report that a government official had illegally steered an award to FedBid. FedBid received 157 contracts worth nearly $11 million in 2014, according to USASpending.gov.
The September 2014 report said a top veterans affairs procurement executive had leaked inside information to FedBid executives while attempting to persuade fellow federal staff that the contractor was a good fit for the agency.
FedBid won a sole-source award in November 2010 despite internal VA reviews that concluded its reverse auction service was too expensive for the agency. Company executives estimated they could make $3.6 million from the award in 2012, according to email excerpts released by the inspector general.
Several of the VA officials implicated in the report came under fire for their role in handing FedBid the contract, and at least one retired after the agency initiated termination proceedings, the Washington Examiner reported in October.
Two days after FedBid was suspended, the contractor met with Air Force representatives and showed them a copy of an ethics code that was apparently written the same month, according to the administrative agreement.
FedBid officials submitted additional documents Feb. 5 detailing their new compliance policies and revealing they had made “management changes.” Those included hiring a chief compliance officer to oversee government contracting.
Joseph Jordan, FedBid’s new CEO, and Rodney Grandon, the Air Force’s suspension and debarment officer, signed the administrative agreement two weeks later.
The eventual agreement “was based on the many significant positive changes the company has made, and agrees to make, that provide assurance the company will deal fairly and honestly with the government and that its continued exclusion was no longer necessary,” the Air Force said in a statement.
Jordan pledged his company’s commitment to “integrity and transparency” moving forward.
“We appreciate U.S. Air Force officials moving expeditiously on their review and consideration,” Jordan said in a statement Monday. “Through that process, FedBid was able to demonstrate that we took seriously their concerns and that we have taken substantive actions to address those concerns.”
Jordan joined FedBid in December 2013, fresh from his role as the White House administrator for the Office of Federal Procurement Policy. Jordan began his tenure at the contractor as president of its government work division.
“With a diverse career over the last 20 years of significant public and private sector procurement, contracting, business process and solution-making successes, Jordan will be a natural fit to move FedBid’s public sector business forward,” Saadat said in a statement upon Jordan’s arrival at the company.
But by Jan. 1, Jordan had taken over as CEO of FedBid, which was cleaved into two separate companies as scrutiny of its activities mounted in the wake of the inspector general report.
The contractor’s commercial portfolio was spun off into its own company, EPS Commerce Inc., with Saadat at the helm while its federal business remained under the FedBid umbrella.
A major provision of the administrative agreement sought to crack down on any possible professional contact between FedBid and its former founder, compelling the contractor to report to Air Force officials the details of any conversations Saadat may have with any staff member.
Even his involvement with EPS, a FedBid subsidiary, must be limited to “arms-length arrangements,” the agreement said.
The contractor must submit itself to review by an independent third-party company to ensure its compliance with the agreement.
FedBid must also maintain a 24-hour whistleblower hotline as part of the agreement.
Air Force officials have the option to terminate the two-year agreement at any point, but they may also extend it an additional year if FedBid complies.
A former FedBid employee who declined to be named told the Examiner that Saadat’s “volatile” personality, unpredictable judgement and tendency to reverse his positions on a whim eventually compromised his value to the company.
Saadat was among a handful of top executives involved with the scheme that sparked the critical inspector general report and subsequent suspension by the Air Force, email records showed.
The government suspended Saadat as an individual the same day it suspended his company, citing “adequate evidence of conduct indicating a lack of business honesty or integrity,” according to the System for Award Management.
A spokesman for the contractor said FedBid has “no reason to believe that there is any additional investigative action pending” on the events that prompted the suspension.
