Sole Sources Contracting without Competition

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Letitia Carpenter
6 years ago
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1 Sole Sources Contracting without Competition Presented By: Kristy D. Varda MS, MBA, CPPB Objectives What determines a Sole Source Justification of a Sole Source Market Research Negotiating Pricing and Terms Next time? 1

2 Polls Does your agency currently allow sole source contracts? Does your agency limit the types of commodities that can have sole source contracts? What is a Sole Source Contract? By definition sole source means designating a company contracted, without competition, to be the sole supplier of a product or service Sole Source Contracts (aka No-Bid contracts) are those established when it has been justified that there is only one source 2

3 Services exempt from competition via federal or state statute New technology with only one current supplier Some states allow sole sources if the total cost is less than their designated small purchase threshold Funding source can impose clear and specific restrictions that make only one source available In the case of software vendor owns the source code so maintenance, upgrades and support can only come from that source Manufacturer has only designated one local supplier or distributor for their product or support Others? (specialized source, geography) 3

4 Unusual and compelling urgency Industrial mobilization or expert services International agreement Required by law (socio-economic programs) National Security Public Interest Is a best practicable source the same as a sole source? Best practicable sources are many times justified as a sole source as while there may be other options out in the market, to acquire from a different source would be cost prohibitive. This many times takes place in software upgrades or maintenance Can also occur during emergency purchases as the purchaser needed a fast turn around of delivery to meet constituent needs. Best interest of public 4

5 Poll Do you or your agency use a form that end users must fill out to justify why they are requesting a sole source contract? Documentation Sole source letters from vendor/manufacturer Justification Form Market research Any other supporting documents that can help the buyer and the public understand how a determination of a sole source came about 5

6 Requestor and Contact information Signature required/not required? Description of what you are wanting to purchase Non-technical Statement of Facts Product/ Service description Other products considered/other sources Explain why this is the only product/service Statement of Facts Continued Explain why this is the only vendor Price Reasonableness (fiscal impact for entire term) Effort to negotiate prior to sending to purchasing Compatibility Will this work with other existing equipment, services ect. Consequences Anything additional that can assist in the determination 6

7 Does the request have conflicting comments Does it adequately describe who, what, where, when, why and how Are the consequences real or overinflated Have alternatives been considered Was market research conducted recently? Is the urgent need due to a lack of planning? If a citizen or other vendors read this would it make sense to them? Would they agree with your findings? Do you take what you are given and run with it or do you research on your own? Initial market research to determine sole source request Financial market research to determine pricing Was pricing offered similar to previous pricing paid If maintenance and software is it 20% or less of the license cost 7

8 Places to Research Online Trade Journals Company Catalogs Other Jurisdictions FedBizOpps Nsite Message boards Chapter List Serves What to negotiate Have a Plan Price Use locked in pricing to secure for the initial term and link price increases to CPI Use market research to determine if the pricing offered is fair and reasonable Determine where the vendor gets their pricing from and work with them to offer the best solution for pricing Negotiate prompt payment or volume discounts 8

9 What to negotiate Continued Term of contract Depending on contract and local policies if you can set the term longer you wont have to spend as much time working on these (however be careful of this as the term could then exceed the technology) Any additional software/maintenance agreements Negotiate any terms you cannot allow by law and anything not applicable to purchase Easy to exploit Claiming public interest (with no definition of public interest) Insubstantial justification Socio-economical reasoning is not enough Must still justify Sole Sources are a key source of corruption and should be heavily scrutinized 9

10 You cannot ride or piggyback off someone else s Sole Source Contract The sole source determination is only good for the initial term and if you write the contract to allow renewals you must re-determine if the contract is still a sole source before renewing Many sole sources are based on ones prior, how do you stop the chain? Should we set guidelines that after x number of contracts we re-solicit to see if market has changed 10

11 Please type them in the Q&A box located on your screen. Federal Acquisition Regulation (FAR) Virginia Public Procurement Act Iowa Department of Administrative Services Slippery Rock University Finance and Administrative Affairs Department of Defense University of Maryland Spokane County Procurement US Army Corps of Engineers 11

Competitive Exception

NEVADA SYSTEM of HIGHER EDUCATION BUSINESS CENTER NORTH, PURCHASING DEPARTMENT Competitive Exception Mail Stop 0242 Reno, Nevada 89557-0242 Telephone: (775) 784-6552 Fax: (775) 784-6017 The Competitive