Reverse Auction Company Reverses its Fortunes FedBid.com, a failed dot-com company, has re-emerged under new ownership as a growing player in the reverse-auction market. FedBid, of Fairfax, VA, will handle around $100 million in sales to federal agencies this year, with the majority of the dollars going to small vendors, says Brendan Walsh, a co-founder and vice president. The company specializes in providing online auctions for off-the-shelf items. “About 95% of the deals are commercial items, commodity-type acquisitions,” he said in an interview. Agency customers post their requests for quotations; registered vendors receive an e-mail notification of the requirement and they post their bids anonymously. Buyers can restrict the bidding to small firms in any category or to GSA schedule holders or companies holding governmentwide acquisition contracts. Vendor registration is free and vendors pay a fee only if they make a sale. Fees range from a fraction of 1% to 3%, depending on FedBid’s relationship with the buying agency. FedBid’s software allows a vendor to automatically lower his bid to beat competition, down to a pre-set floor. When the vendor goes online to check the progress of the auction, he learns only whether his bid is “leading” or “lagging;” the names of competing bidders and the amounts of their bids are not shown. Walsh said the auctions are popular with many government buyers because they save money and time; an auction can last a few hours or a few days. Vendors save the time and money they would spend marketing agency buyers. The State Department is FedBid’s largest customer, but the company also does substantial business with the Customs Service, Navy, GSA’s Federal Technology Service and EPA, among others. Growth has been rapid over the past two years, Walsh said. But in December 2000, the startup was out of money, out of business and out of luck. Founded by five friends and neighbors, FedBid was starting up just as the dot-com boom was going bust. Its assets were bought by Daston Corp., an 8(a) information technology firm in McLean, VA. Walsh, the only one of the founders still with the company, says the 8(a) designation was a key factor in FedBid’s revival. He credits Durie White, director of the State Department’s Office of Small and Disadvantaged Business Utilization, with pointing the company in the right direction. “I was a little skeptical at first,” White said. But after Walsh demonstrated the FedBid system, she began to promote it within the department. Some of FedBid’s best customers are U.S. embassies around the world. “As a matter of policy, we encourage our posts overseas to buy from U.S. small businesses whenever possible,” White says. But people stationed overseas may not know the vendor community. FedBid connects them with qualified sources for commodities, including security equipment. Embassy customers range from Lima, Peru, to Ho Chi Minh City, Vietnam. White says the system has proved to be most popular in less-developed parts of the world where some off-the-shelf items can’t be found on the shelves. She said State’s purchases through FedBid have saved an average of 8% below the cost estimate. FedBid’s track record with the State Department helped the company sell buyers in other agencies, Walsh said. “The 8(a) program only gave us a chance, opened the door,” he said. “We’ve had to win (buyers) over every day in every auction.” About 5,000 vendors are registered on FedBid; Walsh says more than three-quarters of them are small firms. When a vendor registers, FedBid verifies the company’s information through the Central Contractor Registration or SBA’s Pro-Net database and checks to make sure the company is not suspended or debarred. “It can take five minutes” to register, Walsh said. Then FedBid trains the vendor’s employees on its system. “It’s very easy to use and some of the vendors are very savvy,” he added.