Do reverse auction companies have conflicts of interest?

Reverse auction companies such as FedBid may have an organizational conflict of interest in conducting such auctions for federal procurements, according to Dan Gordon, senior advisor to the George Washington U. law school, who testified at a recent House Small Business subcommittee hearing.

“Any private-sector vendor fulfilling a function so closely associated with an inherently governmental one may have an organizational conflict of interest,” Gordon testified.

Such companies may have a tendency to hold auctions even when there is little to no value to the government, because the auctions produce value for their companies, he said. “A company that obtains a fee only if a reverse auction is conducted obviously has an interest in encouraging the use of auctions,” he said.

More information: Gordon testimony http://goo.gl/Di5t8p

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