Key takeaways
- Government agencies generally must compete purchases, but every level of government allows exceptions, such as when only one source can meet the need.
- The agency, not the vendor, makes and documents the sole source decision; vendors can supply factual information to support it.
- A good justification explains the need, why only one source can meet it, what market research was done and why the price is fair.
- Federal grant recipients may buy noncompetitively only in limited circumstances under 2 CFR 200.320(c).
What sole source means
Government agencies are generally required to compete purchases above small-dollar thresholds. A sole source purchase is an exception: the agency buys from one vendor without competition because only that vendor can meet the need.
Every level of government allows sole source purchases in some circumstances, but each has its own rules, documentation and approvals. The agency decides whether a purchase qualifies.
Federal rules
For federal agencies, FAR Part 6 lists seven circumstances that permit other than full and open competition:
- Only one responsible source, and no other supplies or services will satisfy the agency's requirements.
- Unusual and compelling urgency.
- Industrial mobilization; engineering, developmental or research capability; or expert services.
- International agreement.
- Authorized or required by statute.
- National security.
- Public interest.
These are codified at FAR 6.302 and require a written justification and approval. The FAR is being rewritten under the Revolutionary FAR Overhaul, so check the current text and any agency deviations.
Federal grant recipients
State and local governments spending federal grant money follow the Uniform Guidance. Under 2 CFR 200.320(c), noncompetitive procurement is allowed only when:
- The purchase is under the micro-purchase threshold;
- The item is available only from a single source;
- There is a public exigency or emergency;
- The federal agency or pass-through entity expressly authorizes it; or
- Competition is inadequate after soliciting a number of sources.
State and local rules
States, cities, counties and school districts set their own sole source rules in state law and local policy. Common requirements include a written justification, approval by a procurement officer or governing body, and sometimes a public notice period so other vendors can object. Check the purchasing policy of each agency.
What a strong justification shows
- The need: what the agency requires and why.
- Why only one source: proprietary technology, exclusive rights, compatibility with existing equipment or systems, or unique capabilities.
- Market research: what alternatives were considered and why they don't meet the need.
- Fair price: how the agency determined the price is reasonable, such as comparison with prior purchases or published pricing.
Sole source letter template for vendors
Vendors often provide a letter the agency can attach to its own justification. Keep it factual and verifiable.
[Company letterhead]
[Date]
To: [Agency name, department, contact]
Re: Sole source information for [product or service]
[Company] is the sole manufacturer [or exclusive authorized provider] of [product or service] in [geographic area]. The following features are unique to [product]:
- [Specific, verifiable feature, such as patented technology, with patent number]
- [Compatibility with the agency's existing system, with model numbers]
- [Exclusive distribution, maintenance or licensing rights]
[Product] is not available from other distributors or resellers [or: is available only through the following authorized resellers]. Pricing is consistent with our published pricing [or prices offered to similar customers].
Sincerely,
[Name, title, contact information]
Do's and don'ts for vendors
- Do provide accurate facts, documentation and pricing history.
- Do disclose authorized resellers or comparable alternatives if they exist.
- Don't write the agency's justification or determination.
- Don't overstate uniqueness. Unsupported claims can lead to protests or cancellation.
How KSG helps
If your product really is unique, the challenge is finding the agencies that need it. Kensington Sales Group researches target agencies and books meetings with the people who own the problem. See our B2G lead generation service.
This guide is general information, not legal advice. The agency decides whether a sole source purchase is justified and must follow its own rules.
Sources: FAR 6.302, circumstances permitting other than full and open competition; Feldesman, noncompetitive procurement under 2 CFR 200.320(c).