Reverse eAuctions draw scrutiny
Deals for everything from pens to pesticides, from painting offices to performing autopsies — all that and more is up for grabs on FedBid, a fast-growing private company that has positioned itself at the profitable nexus of government and business.
It is like an eBay of Washington, a well-appointed and well-connected online marketplace for lucrative government contracts.
Financed by an investment company connected to Stephen M. Case, of AOL fame, and Ted Leonsis, majority owner of the Washington Wizards, FedBid has assembled a roster of Beltway insiders to promote an unusual approach to how contracts are meted out. Its latest big hire is Joseph Jordan, who was until recently head of procurement policy for the Obama administration.
Through FedBid, government agencies use “reverse auctions” — in which the lowest bid wins, rather than the highest — to decide who is awarded contracts. In theory, the process can save money for taxpayers by encouraging businesses to offer the best possible prices. In practice, it also makes a lot of money for FedBid, which can collect fees from the winning bidders who, in turn, pass those costs to the government.
Source: A version of this article appears in print on April 7, 2014, on page B1 of the New York edition with the headline: ‘Reverse Auctions’ Draw Scrutiny.
By: DANIELLE IVORY / APRIL 6, 2014
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