Back To Basics – Non-Competitive Procurements

Susan Thibodeaux CFCM, MBA

What is a Sole Source?

Definition• Sole Source Acquisition means a contract for

the purchase of supplies or services that is entered into or proposed to be entered into by an agency after soliciting and negotiation with only one source.

Why Can’t I Just Buy Where I Want?

Because

Contracting officials have a duty to promote and provide for competition and to obtain the most advantageous contract for the government • Precision Logistics, Inc., B-271429, July 18,

1996, 96-2 CPD ¶ 24 at 5 This translates to private industry too

• For their company

• For the Govt

CICA

Competition in Contracting Act 41 U.S.C. 253 Competition requirements

• (a) Procurement through full and open competitive procedures.

• (1) Except as provided …. an executive agency in conducting a procurement for property or services-- (A) shall obtain full and open competition through the use of competitive procedures in accordance with the requirements of this title and the Federal Acquisition Regulation; and

Word “Subcontract” is not found in the Act.

CICA Doesn’t Apply Contracts awarded using Part 13’s Simplified

Acquisition procedures Contract mods w/i scope and terms of an

existing contract• Example: exercise an option

Orders under:• requirements contracts• Task order and delivery order contracts• IDIQ Contracts competitively awarded initially

Awards under Section 8(a) of the Small Business Act

Federal Policy 10 U.S.C. 2304 and 41 U.S.C. 253 require, with certain

limited exceptions, that contracting officers shall promote and provide for full and open competition in soliciting offers and awarding Government contracts.

Contracting officers shall provide for full and open competition through use of the competitive procedure(s) contained in this subpart that are best suited to the circumstances of the contract action and consistent with the need to fulfill the Government’s requirements efficiently (10 U.S.C. 2304 and 41 U.S.C. 253).

Warning: we are about to discuss Federal Regulations. This discussion has been known to damage brain cells and cause insanity. This is not for the faint of heart.

FAR PART 6

This part applies to all acquisitions except— • Contracts awarded using the simplified acquisition

procedures

• Contracts awarded using contracting procedures (other than those addressed in this part) that are expressly authorized by statute;

• Contract modifications, including the exercise of priced options• evaluated as part of the initial competition

• that are within the scope and under the terms of an existing contract;

• Orders placed under requirements contracts or definite-quantity contracts;

FAR PART 6 cont.

Also doesn’t apply to:• Orders placed under indefinite-quantity contracts that

were entered into pursuant to this part when—

• The contract was awarded under Subpart 6.1 or 6.2 and all responsible sources were realistically permitted to compete for the requirements contained in the order; or

• The contract was awarded under Subpart 6.3 and the required justification and approval adequately covers the requirements contained in the order; or

• Orders placed against task order and delivery order contracts entered into pursuant to Subpart 16.5.

The Govt’s Accepted Justifications

Take your pick• CICA provides for seven exceptions to the

requirement for full and open competition

Single source

Urgent Ind Mob

Intl Agr

LawNatl Security

 Single Source

FAR 6.302-1 Supplies or services required are available

from only one responsible source and no substitute will satisfy agency requirements.

Must be able to prove • Sources sought?

• Market survey?

• Patents, copyrights, or limited rights in data?

• Unique?

Single Source cont

What if only one bid received? • CICA discusses sole source procedures

• Not sole source procedure • if multiple sources solicited

• Reasonable expectation of receiving more than one bid or proposal

• Bidder/proposer believed there was competition

Unusual and Compelling Urgency.

• FAR 6.302.2

• The need is of such urgency that the Govt would be seriously injured unless permitted to restrict the number of sources from which it solicits bids

• Injury can include financial

• Must solicit from as many sources as practicable

• Lack of planning or funding is NOT a justification!

• Justifications may be made and approved after contract award when preparation and approval prior to award would unreasonably delay the acquisition.

Industrial mobilization; engineering, developmental, or research capability; or expert services.

FAR 6.302-3 To maintain a facility, producer, manufacturer, or other

supplier available for furnishing supplies or services in case of a national emergency or to achieve industrial mobilization;

To establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center; or

To acquire the services of an expert or neutral person for any current or anticipated litigation or dispute.

International agreement FAR 6.302-4 Terms of a treaty or agreement between the USA

and a foreign government

Authorized or required by statute

FAR 6.302-5 Full and open competition need not be

provided for when— • A statute expressly authorizes or requires that

the acquisition be made through another agency or from a specified source; (UNICOR, NISH, 8(a), etc)

• The agency’s need is for a brand name commercial item for authorized resale. • Commissary

National security.

FAR 6.302-6 Full and open competition need not be provided

for when the disclosure of the agency’s needs would compromise the national security

This authority may be used for any acquisition when disclosure of the Government’s needs would compromise the national security (e.g., would violate security requirements);• it shall not be used merely because the acquisition is

classified, or merely because access to classified matter will be necessary to submit a proposal or to perform the contract.

Public interest.

FAR 6.302-7 Full and open competition need not be

provided for when the agency head determines that it is not in the public interest in the particular acquisition concerned.

This authority may be used when none of the other authorities apply.

Use of this authority requires Congressional notification prior to award

Cannot be used for a class of items

Justifications

A contracting officer shall not negotiate or award a contract without providing for full and open competition unless:

• Justifies, if required, the use of such actions in writing

• Certifies the accuracy and completeness of the justification

• Obtains required approvals Justifications may be made on an individual or class basis

• With some exceptions Some justifications for contracts may be prepared and

approved within a reasonable time after contract award when preparation and approval prior to award would unreasonably delay the acquisitions.

Justifications cont. Sufficient facts and

rationale Identification of the

agency/contracting activity Nature and/or description

of the action A description of the

supplies or services and estimated value

An identification of the statutory authority

Justifications cont

Proof of the unique qualifications or why the authority cited.

A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable,

A determination anticipated cost will be fair and reasonable.

A description and results of the market research conducted or why not conducted

Simplified Acquisitions Promoting competition. Must not—

• Solicit quotations based on personal preference; or

• Restrict solicitation to suppliers of well-known and widely distributed makes or brands.

Maximum practicable competition ordinarily can be obtained by soliciting quotations or offers from sources within the local trade area.

• Consider solicitation of at least three sources to promote competition to the maximum extent practicable.

• Whenever practicable, request quotations or offers from two sources not included in the previous solicitation

Simplified Acquisitions Soliciting from a single source.

• May solicit from one source if the contracting officer determines that the circumstances of the contract action deem only one source reasonably available (e.g., urgency, exclusive licensing agreements, brand name or industrial mobilization).

For sole source (including brand name) acquisitions of commercial items in excess of the simplified acquisition threshold conducted pursuant to Subpart 13.5 the requirements at 13.501(a) apply.

If necessary post the brand name justification or documentation.

Micro-Purchases

Micro-purchases may be awarded without soliciting competitive quotations if the contracting officer or authorized individual considers the price to be reasonable.

Current level $3000• DBA $2000

• SCA $2500

• Contingency ops or defense recovery for NBCR • CONUS $15,000

• OCONUS $25,000

Test Program for Certain Commercial Items

Use of simplified procedures • Acquisition of supplies and services in amounts greater than the

simplified acquisition threshold but not exceeding $5.5 million• Offers will include only commercial items

 Commercial Item Sole Sources • Sole source (including brand name) acquisitions.

• Acquisitions under SAP are exempt from the reqts in Part 6. • However, contracting officers must—

• Justify sole sourcing in writing and have approved • Prepare sole source (including brand name) justifications

and reflect • the authority of the test program for commercial items or• the authority of the Services Acquisition Reform Act of 2003

Senate Report No. 50, 98th Cong., 2d Sess. 18 (1984),

Opportunities for obtaining or improving competition have often been lost because of untimely, faulty, or the total lack of advance procurement planning. Noncompetitive procurement or inadequate competition also has resulted many times from the failure to develop specifications …

Tips to Avoid Sole Sourcing

Don’t re-use the old statement of work Describe your needs as clearly as possible.

• Structure the acquisition around the purpose of the work.

• State the requirements in specific, objective, performance or functional terms.

• To the extent possible, include measurable outcomes as opposed to dictating the manner for performing the work.

Be sure that all requirements are free of unnecessary or frivolous features

Tips to Avoid Sole Sourcing

Include time for soliciting industry comments or performing market research through draft solicitations, notices of proposed requirements, “one on one” industry meetings, and expressions of interest.

Where possible, use terms that would permit many different approaches and solicit industry comments on your requirements.

Tips to Avoid Sole Sourcing

Avoid the use of any description or specification that may restrict potential offerors.

Whenever possible, avoid basing requirements on particular products (for example, brand name or equal specifications), proprietary processes, or narrowly focused solutions.

What if Only One Offer?

FAR addresses “adequate price competition”• Reasonable expectation that 2+ offerors, would submit

priced offers

• responsible, responsive offeror

• based on market research or other assessment

• Can reasonably conclude that the offer was submitted with the expectation of competition,

• The offeror believed that at least one other offeror was capable of submitting a meaningful, responsive offer; and

• The offeror had no reason to believe that other potential offerors did not intend to submit an offer;

Only One Offer? Its Okay!

• Determination made that the proposed price is:• based on adequate price competition

• is reasonable

• is approved at a level above the contracting officer; or

• Price analysis clearly demonstrates that the proposed price is reasonable

Protests While the overriding mandate of CICA is for ‘full and open

competition’ in government procurements obtained through the use of competitive procedures . . . CICA does permit noncompetitive acquisitions in seven specified circumstances. When an agency uses noncompetitive procedures . . . it is required to execute a written J&A with sufficient facts and rationale to support the use of the specific authority. Our review of the agency’s decision to conduct a sole-source procurement focuses on the adequacy of the rationale and the conclusions set forth in the J&A. When the J&A sets forth a reasonable justification for the agency’s actions, we will not object to the award.”

- Comptroller General in National Aerospace Group, Inc. (National), B-282843, August 30, 1999

What About Subcontracting?

Many companies differentiate between sole source and single source

Most companies have policies in place • Many mirror the FAR

• Dollar levels and levels of authority vary

• Check your company’s policy

If your company doesn’t have one it’s a good idea to write one.

Sole Source

Selected Vendor is the only source of the product or service.• OEM

• Specialized technology or tools

• Intellectual property

• No alternative available after comprehensive search

• Documented

Single Source

More than one vendor can provide the product or service

Competitive evaluation or bidding not practical• Urgent need and only source that can provide in

time frame

• Quality has proven to be unacceptable from other vendors for similar item

• Using another company would void a warranty

• Justification

http://www.fpdsng.com/fpr_reports_fy_05.html

Reasons Not Competed

http://www.fpdsng.com/fpr_reports_fy_05.html

Solicitation Procedures

http://www.fpdsng.com/fpr_reports_fy_05.html

Fair Opportunity

http://www.fpdsng.com/fpr_reports_fy_05.html

Sole Sources Due to Set Asides

For The Record

Competition category

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008 1Q *

FY 2000-2008

Full and open competition 93 97.4 117.2 131.9 137.1 144.2 150.3 104.9 0.3 976.4

Not competed 48.7 57.3 64.7 75.6 112 101.3 109.4 69.3 0.3 638.4

Competed after exclusion of sources 20.4 24.7 29.3 35.4 40.1 59.8 67.5 43.8 0.1 321

Full and open competition, but only one bid 17.8 15.3 17.5 21.1 28.8 42.7 47.8 41.1 0.2 232.3

Unknown 4.5 0.4 0.2 1.7 2.8 1 7.3 39.8 0 57.7

Not available for competition 17.6 15.6 24.1 19.7 15.2 20.8 22.6 14.4 0.1 150.1

Follow-on to previous contract 6.9 8.9 6.6 12.9 8.7 12.9 12.5 8.3 0 77.7

Total 208.8 219.6 259.6 298.5 344.6 382.6 417.3 321.7 1 2453.7