FAR Sole Source Justification Contracts
Small businesses involved in government contracting find themselves excluded from opportunities because of FAR sole source justification contracts. Government contract law allows federal agencies the opportunity to award sole source contracts, so long as the explanation is reasonable and does not violate other regulations.
Do Government Sole Source Contracting Justifications Violate the Competition in Contract Act (CICA Contracting) or FAR 6.302-1?
Not always. The Competition in Contract Act (CICA Contracting) requires that the federal government award procurements through “full and open” acquisitions. See 41 USC 253(a) (2008). However, like most procurement laws, there are exceptions to the general rule. FAR Sole sourcing in government contracting is allowed if:
- There is only one responsible source, and no other contractor supplies or services will satisfy agency requirements.
- If the federal government’s need for supplies or services is of such an unusual and compelling urgency that the agency would be seriously injured unless the government is permitted to limit the number of sources from which it solicits bids or proposals, full and open competition need not be provided for.
- Sole source contracting justification would be upheld when a statute expressly states that one agency can purchase from another agency or the government requirement is for a brand-name commercial item for authorized resale.
- Statutory sole source contract justification through the SBA 8(a) Program
See FAR Part 6.3 for a full reading of sole source justification contracts.
The Federal Acquisition Regulation (FAR) cause that addresses sole source contracting justifications is FAR 6.302-1, titled “Only one responsible source and no other supplies or services will satisfy agency requirements.”
What Does a Contractor Have to Prove to Show that the Agency Was Not Justified in a Sole Source Award?
The limitations on sole sourcing for government contracts are outlined in FAR Subpart 6.3, which covers other than full and open competition. Some of the limitations include:
1. Unusual and compelling urgency: The agency must have a compelling reason for the urgency, such as a situation that threatens life, property, or national security.
2. Industrial mobilization: When it is necessary to award a contract to maintain a facility, producer, manufacturer, or supplier that would otherwise be at risk due to insufficient or uneconomic production rates.
3. International agreement: Contracts may be awarded to fulfill the terms of an international agreement, such as a treaty or executive agreement.
4. Authorized or required by statute: Some statutes may authorize or require sole source contracting in specific circumstances, such as small business set-asides or contracts for research and development.
5. Unique source: When only one responsible source is capable of providing the required supplies or services.
To show that the agency was not justified in a sole source award, a contractor typically needs to prove that one or more of the limitations on sole sourcing do not apply, or that there were other potential sources available that were not considered by the agency. This may involve demonstrating that the agency did not properly justify the urgency, that there were alternative sources capable of meeting the requirements, or that the sole source justification does not meet the specific criteria outlined in the applicable FAR clauses. Contractors may need to present evidence and arguments to support their position during the contract protest process or other appropriate avenues for challenging the sole source award.
Sole Source Government Contract Awards – Agency Responsibilities
The United States Court of Federal Claims stated in one case that government contracting agencies must “satisfy a series of requirements justifying and authorizing the use of noncompetitive procedures.”See also Corel Corp., 165 F. Supp. 2d at 19 (citing 41 USC 253(f); 48 CFR 6.303-1, FAR 6.303-2, 6.304, 6.305).
When awarding FAR sole source government contracts, the contracting officer must prepare a FAR Sole Source Justification Letter. The justification cites the authority and gives some explanation for the decision.
Justifying 8a Sole Sourcing
The Competition in Contracting Act makes exceptions for statutory allowances for sole source providers and suppliers under the SBA 8(a) Program. Under FAR 19.808-1, 8a sole source contracts cannot be accepted by the SBA for contracts over $20 million unless the contracting agency has met the sole sourcing requirements in FAR 6.303.
- The Agency should submit its justification and approval to the SBA when contracts exceed the $20 million threshold.
- Offerings for 8a Sole Source Contracts must be approved by the appropriate official under FAR 6.304.
- The justification and related material must be available to the public under FAR 6.305.
FAR 6.302-2 Urgent and Compelling Sole Sourcing Decisions
One of the exceptions to Competition in Contract Act “full and open” requirements is that government contracting agencies make invoke an urgent and compelling situation.
This allows the agency to override the CICA automatic stay requirement when in the best interests of the government.
For urgent and compelling sole source contracting justification FAR 6.302-2 government contract awards, the head of the procurement divisions must certify that there are urgent and compelling situations and significantly impact the government’s interests, and staying the award cannot wait until a court resolves any litigation disputes.
Federal Sole Source Justification Contracts Mistakes Made By Government Contracting Agencies
Government contracting agencies, when making their single source justification decisions, sometimes fail to reasonably perform their due diligence on the current market. Under FAR 6.302 1, the government can exercise its discretion when Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.
(a) Authority.
Sometimes courts have rejected an agency sole source procurement because there was more than one responsible source that could provide the required services. See ATA Def. Indus., Inc. v. United States, 38 Fed. Cl. 489 (1997) (finding that a sole source justification contract was unlawful because the products and services in the purchase order were available from protestor and on the open commercial market).
- Government contracting agencies should not use low price for sole-sourcing decisions.
Sole source justification projects are alive and well. However, the federal government does make mistakes. Therefore, government contractors should be aware of the underlying laws.
When have courts ruled that the Agency sole source justification was not warranted?
Courts have ruled that an agency’s sole source justification was not warranted in various cases. Here are a few examples:
- Rothe Development, Inc. v. Department of Defense (2008): In this case, the court ruled that the Department of Defense’s sole source justification for awarding a contract to a specific minority-owned business was not warranted. The court found that the agency’s justification did not meet the statutory requirements for using a sole source procurement method.
- Aldevra v. United States (2011): The court found that the Small Business Administration (SBA) improperly justified a sole source award to a company based on its status as a service-disabled veteran-owned small business. The court ruled that the SBA did not adequately consider whether the company was capable of performing the contract and failed to conduct a proper market research.
- Oracle America, Inc. v. United States (2020): In this case, the Court of Federal Claims ruled that the Department of Defense’s sole source award of a cloud computing contract to a specific company (Microsoft) was not justified. The court found that the agency’s evaluation and selection process were flawed, and it failed to adequately consider Oracle’s capabilities as an alternative source.
These cases highlight situations where courts have found that an agency’s sole source justification was not supported by sufficient evidence, failed to meet statutory requirements or involved procedural errors. It’s important to note that each case is unique and rulings may vary based on specific facts, circumstances, and applicable laws.
For help in a bid protest that challenges an agency’s government sole source justification contracts awards under the Competition in Contract Act and FAR 6.3021, call Watson’s bid protest lawyers for immediate help. Call -866-601-5518. FREE INITIAL CONSULTATION
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