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 award sole source contracts, so long as the explanation is reasonable, and does not violate other regulations.
Do Sole Source Justification Contracts Violate the Competition in Contract Act (CICA) or FAR?
Not always. The Competition in Contract Act (CICA) 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. 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 justification contracts 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 justification through the SBA 8(a) Program
See FAR Part 6.3 for a full reading of sole source justification contracts.
Government’s Responsibilities Before Awarding FAR Sole Source Contracts: 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 41USC 253(f); 48 CFR 6.303-1, FAR 6.303-2, 6.304, 6.305).
When awarding FAR sole source justification contracts, the contracting officer must prepare a 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 sole source suppliers under the SBA 8(a) Program. Under FAR 19.808-1, 8(a) Sole 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 Justification Contracts must be approved by the appropriate official under FAR 6.304.
- The sole source justification and related material must be available to the public under FAR 6.305.
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 justification contracts, 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.
FAR Sole Sourcing Mistakes Made By Agencies
Government contracting agencies, when making their single source justification decisions, sometimes fail to reasonably perform their due diligence on the current market.
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 contracts are alive and well. However, the federal government does make mistakes. Therefore, government contractors should be aware of the underlying laws about sole sourcing.
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