We all know that the free-spending era of federal surpluses is history; federal belt tightening has begun. Historically, when money gets tight, Congress asks GAO and the IG to check up on agency procurement practices. Recent reports have focused on sole source orders that weren’t justified and authorized according to the rules.

All salespeople want to avoid competition by being the only source considered, but in the federal market this approach can add cycle time and unforeseen risk to a deal. To avoid competition, manufacturers have traditionally directed their government customers to three different resellers to address the competition requirements.

But three “sources” for an item “peculiar to one manufacturer” is not competition according to the Federal Acquisition Regulations. (FAR 6.302-1(c))

The new rules for ordering under schedule contracts reinforce this idea by requiring a documented sole source justification if “The item is peculiar to one manufacturer. A brand name item, available on various schedule contracts, is an item peculiar to one manufacturer.” (FAR 8.405-7(a)(4)(iii))

The government is saying that it wants buyers to compare three different brands like BMW, Lexus and Mercedes, not just compare prices for the new BMW 545i at three different BMW dealers.

The new rules say that if the buyer only considers an item peculiar to one manufacturer, a sole source justification is required.

What is the process for a sole source justification?

First, a justification must be prepared and then authorizing officials must personally certify that no item produced by another manufacturer can fill the requirement. This is a very high standard, representing significant risk to a contracting officer. We have seen numerous occasions where a sole source justification was prepared, but never authorized, ultimately forcing the procurement to a more competitive path thus adding more time to the sales cycle.

Second, the sole source justification process requires that a synopsis of the proposed contract action be published for at least 15 days after which other unsolicited proposals may be considered, adding cycle time and risk to the transaction because competitors can submit their own proposals during this synopsis period.

Is there a way for the government to evaluate competing products and simply place an order for the one that offers the best value?

Yes, in two ways.

First, GSA’s Federal Supply Schedule contracts allow buyers to simply place orders for products and services not requiring a statement of work. But this process puts the burden on the manufacturer to help the buyer understand that their product is a better value than two other competitors.

The buyer must document this best value analysis and be able to explain it to the contracting officer. When this is done, the government receives the best value without going through the full and open competition process or the sole source justification process. This approach can be used for orders of all sizes, but again, the contracting officer must have written best value justification to show that at least three manufacturers awarded on a schedule contract were considered and that your items offer the best value.

Second, Government-Wide Acquisition Contracts (GWACs) allow buyers to place orders with one of the prime contractors holding one of these pre-competed contracts, provided all primes are given a fair opportunity to compete for the order. (FAR 16.505(b)(1)) Just make sure all parties understand how the fair opportunity process works for the GWAC your government buyer is asking you to consider.

Third, the government can place sole source orders with certain small disadvantaged businesses without synopsizing the requirement. But, it is the agency that identifies the one uniquely qualified small disadvantaged business that in the agency’s opinion can address the requirement. This is why a manufacturer’s federal partner and contract vehicle strategy must be structured to accommodate any and all such entities on a case-by-case basis.

For more information, go to www.immixgroup.com.