Vienna-based FedBid Inc. announced Friday a partnership with Experian Business Information Solutions Inc. to provide government agencies that use its reverse auction service with access to contractors' credit information. Is this a good way to weed out waste and fraud, or a step over the line?
Reverse auctions provide agencies the option to post their requirements for work on a website, where contractors then bid for it. The contractor willing to accept the least amount of money wins the contract. Picture eBay, but with bidding that drives costs down, not up.
What this partnership will provide, according to a press release put out by Costa Mesa, Calif.-based Experian, is a "badge" next to a business' listing on the FedBid site telling agencies a bit about its credit information.
Specifically, the badge may be green, yellow or red. Green means the business has no active liens, judgments or major credit issues. Yellow means some questions were raised in Experian's records that might be worth further evaluation. And red means the business has multiple public record filings or credit concerns.
In a released statement, Allen Anderson, president of Experian’s Business Information Services, said "procurement personnel must have a non-biased method to quickly and accurately assess the business health and responsibility of contractors and suppliers."
But in lieu of any federal regulation, what can or would agencies even do with this information? And is it fair to draw conclusions about a business based upon credit information?
"It seems reasonable on the surface," said one private sector procurement expert who asked not to be named. "My only question would be how contracting officers will be told to handle the info. Does a yellow mean no go?"
Furthermore, "if you think about all the people who have short-term credit issues that are quickly cleared up, I think some guidance as to what the ratings mean and whether anything other than a red requires action would be in order."
The partnership comes only a couple months after entrepreneurs Ted Leonsis and Steve Case decided to make Vienna-based FedBid the first investment for their $450 million Revolution Growth fund, noting plans to accelerate the growth and reach of the company. FedBid has seen the annual value of purchases made through its online portal rise more than 60 percent since 2008.