Sole source contracts are the type of contracts that can be issued without any competitive bidding process. This generally happens in situations where only a single business can fulfill the requirements of the federal contract. To be considered a sole source contract, it is important to register the business with the System for Award Management. And the business should participate in any type of contracting program that they qualify for.
What are Sole-Source Contract
Sole source contracts are a unique type of non-competitive contract. They are defined as any contract that a business enters without any competitive process based on the justification that only one single source exists and that a single-source contractor will be able to fulfill all the contracting requirements.
In order to qualify as sole source contractors, their procurement should exceed $10,000 in total value. They should also be qualified as only one viable source of rendering the produce or survival, which is essential for contract fulfillment.
The specific conditions and the limitations around the use of sole source contractors are indeed stringent, as their use is stringent and serves as a last resort only. In some instances, the sole source contracts should be publicly published and will be marked with the intent for sole source. The potential vendors would be able to view and bid on the contracts, and after the bidding process starts, the intent to sole source might be withdrawn.
Need for Sole Source Contract
The sole source contract is a business that is capable of providing only one item or service and thus should not suffer any competitive bids from its rivals. As businesses make use of only one supplier to procure their products and services, they will be able to cut down their costs and risks by limiting the number of suppliers they have to deal with.
At times, businesses might lack supplies as they have opted for monopolist suppliers to offer the goods and services they require. This might be due to the unique nature of the product or service or their proprietary technology and expertise, which may not be replicated easily by other vendors.
When are the Sole Source Contractors Used?
Sole source contractors are considered to be controversial and some states do not allow non-competitive procurements as well. If the state does not allow non-competitive contracts, they might make certain exceptions in certain instances which are as follows.
- The sole source contractor serves as the only known source that exists for services and supplies determined by documented research.
- There is no alternative source of contracting that exists to meet the requirements of the agency.
- The sole contractor serves as the only source to meet the business needs of the agency.
- They are also used for the procurement of the public utility services.
When is the Sole Source Contract not used?
If there is more than one potential bidder or offeror for the product, it may not be considered as a sole source contract. If the unique produce or service of the contractor doesn’t qualify them, for sole procurement then they may not be awarded the contract. As these contracts are controversial in nature, most of the states demand a written justification to support their request for procuring sole source contracts. This requires the business to submit information pertaining to why the contract prohibits competition, research reports on how the vendor is the only known source of contracting, and descriptions of the marketplace and those participating in it.
To be considered as a sole source contract, the business entity should register itself in the System for Award Management. They should also identify the contracting programs that they qualify for. Some states also require the sole source contracts to be published publicly like other contracts for bidding. Businesses can view and procure Government contracts on certain websites like MySetAside to start bidding and seek Government projects.