Sole Source Contracts are non-competitive procurements that allow a single supplier to fulfill the needs of the contractual requirements. Though Full and Open Competition is preferred in federal acquisitions, the use of a sole source can be highly valuable when specific circumstances are met. Sole-Source acquisitions are detailed in the Federal Acquisition Regulation (FAR) parts 6 and 13; aspects of the sole-source award process include an exigent need, limited source of supply or service, brand-name justification, and/or competition is determined inadequate. In most cases, Sole Sourcing is the result of competitive proposals being not applicable to the contract requirements.
How Are Sole Sources are Awarded?
Sole source awards can be made to vendors when one or more of three criteria are met.
- The item/service is available only from one source (Brand Name Justification).
- The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation.
- Competition is determined inadequate after solicitation of a number of sources.
Justification an Approval (J&A)
Sole source awards require contracting officer to complete written justifications for approval when considering a sole source contract. It is important for vendors to arm contracting officers with the information that need to help to make this justification. The requester will provide circumstances for approval with applicable supportive information. These criteria include:
- Description of the project and amount to be designated for the contract
- Explanation of necessity to contract from one source:
- Descriptions of unique aspects in which eliminates competition. Such as unique capability, expertise, facilities or equipment that no other source can provided.
- Verifying that such aspects are indeed only available through the one source.
- If this is an urgent timing matter, such as emergencies that will have a significant effect, please provide the descriptions of deadlines, impacts of deadlines and the need for the timely contract.
- If there are competitors, explanation of how long they would take to complete the same task
- Results of a Market survey determining the inadequate competition
- Declaration that this sole source procurement is in the best interest of the agency.
Sole Source Thresholds
Here are a few tips to remember when purchasing lobbying for a sole source. Every purchase that goes over the Micro-Purchase Threshold of $10,000 (or $3,500 for DOD), a justification will be required, unless the purchase is from an existing contract, the supplier is named in the opportunity or the purchase is being competitively solicited. The only exception for justification is consulting services.
When above the micro-purchase threshold, agencies have the authority to award Sole Source contract noncompetitive proposals but must meet extensive criteria for justification and approval. Sole Source justification must meet the following circumstances:
- Written justification must be provided and approved specified in FAR based on value of acquisitions
- Above the micro-purchase threshold, but below the simplified acquisitions threshold – contracting officer certification that acquisition is accurate and complete
- Above the simplified Acquisition Threshold, but below $700,000 — contracting officer certification that acquisition is accurate and complete
- Above $700,000, but not exceeding $13.5 million – the advocate for competition for the for the procurement activity or designated officer (see FAR 6.305) approval is required
- Above $13.5 million, but below $68 million – head of the procuring activity of designated official (see FAR 6.305) approval is required
- Above $68 million — by the senior procurement executive of the agency in accordance with agency procedure
- Make the justification publicly available within 14 days after contract award, unless it is an unusual and compelling urgency, then 30 days after award
Sole Sourcing Denial
There will be situations where the Sole Source contract will not be accepted. This happens when there is more than one bidder or offeror for the one proprietary item, when an agency prefers a specific name branded product or at times, those aspect’s uniqueness alone will not be enough to be determined as a sole provider. In addition, the justifications can also result in disapproval if it is used to select a preferred vendor. This will lead to auditors digging for details to suggest a possibility of favoritism, partiality or other bias.
The benefits to a vendor are multiple, but you should understand the benefits to agencies as well to help negotiate the need for a sole source. Aside from a quicker acquisition process, other benefits include an efficiency increase on the administrative side with lowered production costs, fewer contracts to negotiate and, ideally, a better value for the prices. Product quality should improve as the delivery process will be more effective. Because of the short span from delivery to use, there may be quicker discoveries of any defective items. There will also be an opportunity to build a partnership with the supplier which could be very beneficial long term.
Please let Coley know if you have any questions on federal contracting or sole sources items.