As a CO, I wrote dozens of sole-source contracts. I bought aircraft, body armor, vehicles, services, software, and I even paid for the use of a testing facility for off-road vehicles through sole-source contracts. It made sense because at the time the companies who got these contracts were the only companies who could provide the products or services we needed in the timeframe we needed them. Each of these sole source awards was documented through a Justification and Approval and was completely appropriately for the circumstance.
However, …
When I zoom out to my whole career as a CO, over billions of dollars’ worth of products and services, less than 5% of the VALUE of the contracts I awarded were sole source.
Unfortunately, the amount of labor and time involved in prepping for, awarding, negotiating, and administering these contracts was disproportionately higher than those I awarded through competitive source selections. I suspect the companies who got these sole source awards also spent a disproportionate amount of time on them. I know that now because I see our members suffer through these sole source contracts. One customer ended up having to pay back $30,000 in unallowable costs on a sole source contract they were given EIGHT YEARS ago. That’s why some companies who have lots of sole source contracts may be sitting on ‘time bombs’ as the hidden efforts of sole source contract management appear years later. While getting the contract may have been ‘easier’…managing it and making money from it, while possible, did not turn out to be easy.
Why?
Because under sole source contracts it was much harder for me to know that I was getting a fair deal – including the best technical solution, at the best schedule, AND at the best price. Remember, getting a fair price is one of the core responsibilities of a contracting officer. Under sole source contracts, I had to negotiate every nut and bolt, every piece of testing equipment, every labor hour, every overhead rate, and every detail of the contract. The amount of work it took both our government team and the contractor’s management team to award and administer was up to 10x the amount for similar-sized contracts that I competed.
Competitive contracts, including source selections, are not simple or easy to execute quickly. However, the non-competitive process often has as many (or more) steps as the source selection process does. The sole-source process can be painfully long and complex. Ironically, it’s more complex than the competitive process, but without the upside of knowing you are likely to end up with a better solution from a competitive company at a price that is reasonable based on competition.
That’s one of the reasons that contracting officers often choose to avoid it. In sole source contracts, you get who you get.