Sole Source Procurements
Third Party Procurement
Frequently Asked Questions
Q = Question; A = Answer
Q. If we have a brand of software currently in use and we are renewing the annual licensing agreement or maintenance contracts, do we need a sole source or sole brand justification to support this procurement?
If we have a brand of software currently in use and we are renewing the annual licensing agreement or maintenance contracts, do we need a sole source or sole brand justification to support this procurement?
We use Cisco, Microsoft, ESRI, etc. and annually we must renew their maintenance and user license contracts. It’s a given that if we use Microsoft that we need Microsoft licensing or maintenance. This can go out for bid still, but since we are designating a brand, do we need to support this procurement with a sole source/brand justification?
A. You should process a sole source justification each time you enter into a new contract agreement (or an extension of an existing contract), unless the period of the extension was covered by an original justification or by competition which asked for priced options which were in turn evaluated for the initial award. (Reviewed: June 2010)
Q. What constitutes an emergency or exigent circumstance for the purpose of FTA procurement?
A. As general guidance you may want to read the equivalent guidance for Federal procurement in FAR 6.302-2 - Unusual and Compelling Urgency, and the discussion in the Best Practices Procurement Manual (BPPM) section 4.6.1. (Reviewed: June 2010)
Q. Are the following examples of a contract amendment or modification that require a sole source justification?
- Contract extension past allowable option years of a year or more.
- Increase in the rates paid to a paratransit service contractor that is caused by the contractor claiming that it is losing money.
A. Contract extensions beyond the term originally competed are actions requiring a sole source justification unless the extension is due to delays caused by the agency that prevented the contractor from completing the work called for by the contract, or change orders issued under the changes clause (changing the specifications) that had the effect of adding additional time to complete the original contract work. If you have an operational services contract, you cannot simply extend the contract beyond the term that was originally competed and awarded as a result of that competition.
As for increasing the rates to be paid to the contractor, there must be a contract clause and factual situation entitling the contractor to additional funds. The fact that it is costing the contractor more to perform would not normally entitle the contractor to a price increase, unless there was a provision in the contract entitling the contractor to a price adjustment. Of course, if the agency took actions that caused the additional costs, then there may be an entitlement under one of the contract’s clauses. You should confer with your legal counsel about this issue and have them review the contract terms and the facts. This pricing issue does not appear to be a sole source problem requiring a sole source justification (i.e., there is no new work involved). It does require a justification in the file as to why the contractor is entitled to a higher price, and of course if the contractor is, then the contractor must submit cost data to support the higher price and the agency must perform a cost analysis of the data. (Revised: June 2010)
Q. Let's suppose that a sole source procurement is justified. The procuring agency has documented its rationale and obtained approval from the FTA. Since the vehicle to be purchased is priced under the $100,000 threshold, does it have to meet Buy America requirements for content and final assembly?
A. The Buy America Regulations do not apply to contracts below $100,000. See Appendix A (c) to 49 CFR § 661.7. We would note, however, that if the contract includes options, the value of the options is included in the "contract value" in determining if the value is above $100,000 for purposes of Buy America applicability. (Reviewed: June 2010)
Q. Can we contract with the original contractor who completed the installation as a sole source or do we have to compete? The cost to us will not change i.e. the $10,000 deductible. We have a structure that was damaged by a recent storm. The structure was partly funded with federal dollars. The damage to the structure is $70,000. We have insurance with $10,000 deductible. Our insurance company advised us to contact the original contractor and get an estimate, which they have approved.
A. Your agency has the authority to make a sole source determination, based on the urgency of repairs, knowledge of the original installer, or any reason you deem important, to award this contract to the original installer. You do not have to compete this award if your agency determines there is adequate justification for a non-competitive award. You need to document your decision and obtain the necessary agency approvals. (Reviewed: June 2010)
Q. Is there a requirement to periodically report sole source procurements to FTA?
A. There is no such requirement. (Reviewed: June 2010)
Q. Can a justification for a sole source procurement of bus shelters, benches and solar lighting be made on the basis that federal funds will be used to supplement existing equipment and materials and that standardization of architectural elements is a requirement of communities being served?
We are using federal grant monies to improve hundreds of bus stops within nine communities that are served by the District and that already have established a standard look and equipment selection. We are being asked by our Board of Directors that represent these nine entities, to match existing bus shelters, benches and lighting. Can it be done with an internal justification, or does the FTA need to grant permission to do so?
A. Grantees have authority to award non-competitive contracts without prior approval of FTA. In fact, FTA does not normally become involved in sole source decisions unless there is a protest by a contractor who believes the sole source award is inappropriate. The other means of FTA involvement is through the periodic Procurement System Reviews (PSRs) where FTA through a PSR contractor will look at selected sole source contracts after the fact to see if the grantee's rationale is sound and properly documented.
Your agency will have to document the reasons why standardization of bus stop architecture is a valid requirement, precluding other architectural designs, and why only one source is capable of duplicating that architecture (e.g., why drawings/specifications cannot be developed to competitively procure the shelters). (Reviewed: June 2010)
Q. Our agency has a materials supply contract with a materials contractor to build automated fare collection equipment that we have already installed throughout our subway system. Given standardization, warrantee, maintenance, timing and other issues, we would like to negotiate a change order within the current contract to have this same contractor prepare fare equipment to be placed throughout the 150 commuter rail stations (we will procure a design contract to prepare plans and specs for installation, and will procure a construction contractor to construct/build it into each station). Can this be done through a change order through the existing contract with an internal justification or does FTA need to grant permission?
A. When an FTA recipient requires an existing contractor to make a change to its contract that is beyond the scope of that contract, which is what you have described, the recipient has made a sole source award that must be justified in writing. Circular 4220.1F details the conditions for proceeding with a procurement action that does not provide for full and open competition. Assuming one of the stated conditions are met, you are not required to seek FTA authorization, however, you are required prepare and maintain a detailed written justification supporting the action. If you are not able to justify the sole source based on the enumerated conditions, you are advised to seek authorization for the sole source action from FTA. Note that less than full and open competition is not justified based on failure to plan. (Revised: June 2010)
Q. Our 5-year transit vehicle advertising revenue contract will expire before we are able to get a new contract in place due to workload issues. The current contract was the result of using an RFP for competition and the same RFP process is in the works now but we won't allow the project manager to extend the current contract by 3 months because the vehicles were purchased with Federal money. Does the FTA agree with our interpretation that a 3-month extension of the current contract would be a violation of competition and would consider it non-allowable?
A. It may be appropriate to chastise your agency for poor planning but there would appear to be no other choice than to extend the current agreement while a new contract is competed. We would only suggest you take all necessary steps to issue an RFP for proposals as soon as possible and minimize the time for a new award. The file needs to be documented as to the reasons why the contract was not advertised earlier. We would also point out that, except for rolling stock or replacement parts, there is no longer a 5-year term limit for FTA-funded contracts. FTA leaves the term of the contract to the grantee's best business judgment. (Revised: June 2010)
Q. Is it true that FTA funds over $2,500 to be used for consultant services cannot be sole sourced?
A. The FTA Procurement Circular 4220.1F requires competition for all procurements above the micro-purchase threshold, which is currently set at $3,000 maximum (although your agency procurement procedures may currently establish a lower threshold for micro-purchases). Above the micro-purchase threshold, and up to the small purchase threshold (currently $100,000), you must compete the award by soliciting proposals from an "adequate number of qualified sources”. Beyond the small purchase threshold, you must advertise the procurement on the basis of "full and open competition”. Thus your procurement for consulting services, if above the micro-purchase threshold of $3,000, but not exceeding $100,000, must be competed by soliciting proposals from an "adequate number of qualified sources”. The requirements for "Small Purchases" are discussed in Circular 4220.1F, Chapter VI, paragraph 3.b. - "Small Purchases”. (Reviewed: June 2010)
Q. Can a designated grantee award a sole source contract to a501c-3 if that non-profit was the only proposal submitted? Background Information: the non-profit will supply professional services and administration for a specific unique concept developed by the non-profit.
A. Grantees have the authority to make sole source subcontract awards under certain conditions as discussed in FTA Circular 4220.1F, Chapter VI, Pages VI-16 through 20, which is available online.
The status of the subcontractor as a 501(c)(3) would not in itself justify a sole source award. If your agency has a need that this non-profit organization can fill, we would recommend that you advertise the need and request information (not necessarily proposals) from sources that feel they can meet that need. If in fact no firms come forward, you can then proceed with the sole source award based on your research of the market demonstrating that no other organization can meet the need. If other firms do come forward, then you can solicit proposals from all interested firms and evaluate which one best meets your need. (Posted: December, 2011)
Q. Is there any guidance regarding the signature authority for a Recipient’s written sole source justification document? Specifically, who should review and approve such a justification?
A. FTA has no requirements as to the signatory authority for a sole source justification. In fact a grantee may have several authorizing officials depending on the dollar value and or the urgency (as in a matter of public safety) of the needed contract. Good internal control/management procedures would require an approving official that is outside of the user's department that is recommending the sole source. This official is often the Director of Procurement for contracts up to a certain dollar value, with a higher - level management official (e.g., the General Manager) required to approve larger dollar procurements. (Posted: December, 2011)
Q. We are replacing engines in buses, and need to procure the engine by itself. In part, as an OEM, it is the only engine available, so we have to buy it from Cummins and our sole source document will reflect that. However, nationwide, Cummins is the only diesel engine manufacturer that PARTA is aware of and we were wondering if FTA was aware of this and might consider acknowledging it for review purposes. We are concerned that a reviewer might consider our consistent purchase of Cummins powered equipment as either a violation of "sole source" or "brand name" requirements.
A. The FTA Procurement Circular 4220.1F, Chapter VI, page VI-17 (http://www.fta.dot.gov/documents/C_4220_1F.pdf), recognizes that a sole source situation exists when the supplies are available from only one source. If that is the case, as you say, with the diesel engines for buses, then a sole source award is justified. FTA would not normally review your sole source contract awards unless they were conducting a Procurement System Review (FTA uses consultant - contractors to conduct these reviews) or there was a protest by a supplier that was questioning the sole source award. We would advise you to advertise your diesel replacement procurements so as to demonstrate to any future reviewer of the contract (e.g., an FTA PSR consultant) that no sources for engines came forward to bid on your procurement except Cummins, or equal and listing the salient characteristics. (Posted: June, 2012)
Q. In accordance with FTA Circular 4220.1F the recipient must issue a sole source justification. Normally FTA does not review a recipient's Sole Source requirement unless FTA so requests. Currently reviewing a recipient's FTA requested Sole Source Justification with some concerns about the justification. If the recipient awarded a sole source contract without the FTA review, is the contract valid?
A. For a variety of reasons, FTA has intentionally chosen not to review and approve grantee sole source determinations before award. Thus the contract in question is not invalidated if the grantee does not obtain advance FTA approval. FTA may of course review the justification after award, and if it finds the grantee has abused its discretion, it may withdraw its funding from the procurement. (Posted: June, 2012)
Q. What do we do when processing a sole source procurement and have asked for a cost analysis in which the contractor refuses to give such information as it is not their policy? We have dozens of software maintenance contracts that are sole source and they will not divulge such information. If we do not place the order our systems are at risk in case of problems. Some of the software platforms cost millions, and to not have maintenance is not an option when public safety is involved.
A. FTA does not insist that the grantee obtain a cost proposal for sole source contracts, only that it attempts to do so. However, when a cost proposal is not available from the vendor, grantees must perform a price analysis that demonstrates the price being negotiated is fair and reasonable when compared with similar products or services that are available on the open market. (Posted: January, 2013)
Q. Can a grantee use the City’s broker (competitively selected and free of charge), to compete for a new policy?
A. We see no reason the grantee cannot use the City's insurance broker at no cost to the grant in order to place an insurance policy. Since the policy premiums will be paid with FTA funds, the broker needs to be aware of FTA procurement policies re full and open competition, etc. (Posted: August, 2013)
Q. Do we need to include the signed Federal certs (for example, non-collusion, conflict of interest, confidential information agreement, etc.) for sole source procurements with Federal funding? We have never included them, the rationale being we have no choice but to procure (from a sole source). We have never gotten cited on it during a PSR either. We include them in Fed, ARRA but not Operations. I need clarity as to if they're needed or not. 3rd parties must sign them in all competitive bids but not sole source.
A. Where the Federal regulations require the bidder/offeror to sign certifications and representations, it does not matter if the procurement is sole source or competitive. These representations and certifications are required for all procurements regardless of their competitive nature. If the contractor refuses to sign a federally required certification, the grantee is not permitted to award a contract to that contractor, even though the grantee has determined that the contractor is the only source for the product or service. As a practical matter we have not seen a situation where a contractor has refused to sign a required representation or certification. (Posted: October, 2013)
Q. Is an RFI (Request for Information), where only one vendor says they can provide the product, adequate documentation to support a sole-source award? Besides sending the RFI to several firms, must the RFI also be advertised?
Background Information: A transit agency purchased a dispatch software and computer hardware system three years ago. The agency now wants to buy mobile data terminals/automatic vehicle locators to install in the buses and link them to the dispatch system. The original vendor says their firm is the only firm who can connect the MDTs/AVLs to the original system and the procurement must be a sole-source award.
We want to tell the transit agency to do a Request For Information (RFI) to several technology vendors asking if they can connect the MDTs/AVLs to the original system. If other vendors say they can, then the transit agency must issue an RFP. If not, the transit agency then has the documentation to support a sole-source award.
A. FTA requires "full and open competition," which means "all responsible sources are permitted to compete" (FTA Circular 4220.1F, Chapter I. 5.n.). This means that the procurement must be advertised, which is especially important in a case where the transit agency believes it may have only one qualified source for the requirement. The specific requirement to publicly advertise a competitive RFP may be found in Chapter VI. 3.d.((2)(a) of the Circular. The agency cannot simply accept the incumbent contractor's assertions that it is the only source available for the mobile data terminals. The requirement should be advertised and also sent directly to all firms known to produce mobile data terminals. (Posted: November, 2014)
Q. My question was whether or not on a sole source procurement, does the FTA require pre-approval of the sole source prior to award? Also, is there a specific FTA contact that an agency can contact if they have sole source questions or should we speak with our local office?
A. Grantees have the authority to award sole source contracts. FTA does not normally become involved in reviewing or approving these contract awards. You may contact your regional FTA Office in Seattle at (206) 220-7954 if you have questions. (Posted: December, 2014)
Q. If no bids were received at time of bid opening, are we free to negotiate with any firm willing and able to do so? Background Information: A solicitation for a sealed bid was released for a video surveillance and security system. The procedures for a sealed bid, advertising, bidders list, etc., were followed. On the day and time of bid opening there were no bids received. At this point are we free to negotiate with any firm willing to do so?
A. We would question why a firm would decide to "no bid" your competitive solicitation and then be available to negotiate an acceptable contract on a non-competitive basis. This suggests that there is a problem with your specification or other terms and conditions that needs to be corrected. We would suggest the first step should be to contact all firms solicited to determine why they no bid your solicitation. The firms should be requested to respond in writing. If there was a problem that can be corrected then a revised solicitation should be issued. Selecting a firm to negotiate a sole source contract based on changed terms and conditions from those originally advertised would not be acceptable. All potential firms must be allowed to bid on the revised requirements, and these new requirements must be advertised. (Posted: December, 2014)
Q. I believe that sole source contracts must be approved by FTA. I want to know who approves sole source requests for FTA Region 4. Can I have contact information?
A. FTA does not, as a matter of routine, approve sole source contract awards. Grantees have the authority to award these contracts assuming they follow their procurement policies and procedures with respect to proper documentation and management approval. This would entail the documentation of the reasons why the award can only be made to one firm, without competition, and approval by the management official designated to approve these actions. If you would like further advice you may contact the following person in Region 4:
Dwight Hill, CFCM, Contractor
Sr. Contracts Consultant
FTA Region 04 – Atlanta
230 Peachtree Street, NW, Suite 1400
Atlanta, GA 30303
Dwight.email@example.com (Posted: November, 2015)
Q. We are in the process of adding real-time bus location technology for our customers. One of routes is a commuter route operated by our sub-recipient (Big BendTransit). We would like to use federal money to purchase the Automatic Vehicle Locator (AVL) devices from our technology vendor to place on Big Bend Transit's vehicles. So I have two questions: 1. Do we need a new contract or can we amend the existing contract to allow for the lease of the AVL devices? 2. If so, what format/clauses should the amendment/contract include?
A. We assume from your question that the agency must have the same AVL equipment as currently exists on buses now. If this is the case you will have to process a sole source justification through the proper agency officials in order to justify a non-competitive award to the existing supplier. Once a sole source justification is approved, we would suggest you negotiate a new contract and include the federal clauses listed in FTA Circular 4220.1F, Appendix D, in the column, “Materials and Supplies.” If the value of the contract is expected to exceed $100,000 from inception over its expected future term, you will have to include the clauses required for contracts over $100,000. Of particular importance is the Buy America certification and associated contract clauses. The FTA Circular 4220.1F may be found online: http://www.fta.dot.gov/legislation_law/12349_8641.html (Posted: November, 2015)