Sole-Source Contract (No-Bid Contract)

How It Works

Sole-source contracts bypass the default full-and-open-competition rule established by the Competition in Contracting Act of 1984 (CICA, 41 U.S.C. 3301). They are permitted under one of seven statutory exceptions codified in FAR Subpart 6.302: (1) only one responsible source (patented technology, proprietary data, unique capability); (2) unusual and compelling urgency (e.g., emergency disaster response, immediate national security threat); (3) industrial mobilization or national research capability; (4) international agreement; (5) authorized or required by statute; (6) national security (disclosure of the requirement would compromise security); or (7) public interest as determined by the agency head. For any sole-source award above the Simplified Acquisition Threshold ($250,000), the contracting officer must prepare a written Justification and Approval (J&A) document explaining which exception applies, what market research was performed, and what efforts will be made to improve future competition. J&As above $750,000 require approval by the competition advocate; above $15 million, by the agency head or designee; and above $93 million, they must be reviewed by the senior procurement executive. J&As above $100 million must be publicly posted on SAM.gov with the award notice. Sole-source awards attract disproportionate scrutiny because they lack price competition, which studies by the Congressional Budget Office and GAO estimate drives down contract costs by 8-20% on average compared to non-competitive awards. Recent high-visibility sole-source awards include early COVID-19 vaccine contracts with Pfizer, Moderna, and Johnson & Johnson in 2020 under BARDA authority, many SpaceX launch contracts awarded under the "only one source" justification for Falcon Heavy lift capability, and ongoing classified contracts for specialized defense and intelligence capabilities. Roughly 40% of federal contract dollars were awarded non-competitively in FY2023, a share GAO and Inspectors General consistently flag for oversight review and that agencies must justify to Congress in annual competition advocate reports.

Related Terms

• Competitive Bidding (Full and Open Competition), The standard procurement process where the government publicly solicits proposals from multiple vendors and selects the best offer based on price, quality, and capability.
• Federal Contract, A legally binding agreement between the U.S. government and a private company to provide goods or services, from fighter jets to IT consulting.
• Contracting Officer (CO), The government official with legal authority to enter into, administer, and terminate federal contracts, the only person who can obligate the government.
• Justification and Approval (J&A), The formal written document that a contracting officer must prepare to justify any non-competitive contract award above the Simplified Acquisition Threshold.