In certain circ*mstances, a Sole Source or Single Source procurement may be necessary. In either case, the procuringdepartment should begin by developing a statement of work/scope which defines the commodities, technology or services it is seeking to acquire. All purchasing requires pricing justification.
Single Source Purchase Justification
Definition:A Single Source procurement is one in which two or more vendors can supply the commodity, technology and /or perform the services required by an agency, but the department selects one vendor over the others.
Departments must state the circ*mstances leading to the selection of the vendor, any alternatives considered, rationale for selecting the vendor and howit was determined that the price was fair and reasonable.
Guidelines for Substantiating Single Source
- Past experience with a particular issue and this vendor has the historical knowledge or was the original installer.
- Experience with similar projects at other agencies or at other levels of government.
- Demonstrated expertise.
- Capacity and willingness to respond to an emergency situation.
Price Justification (Required):
- Competitive quote but other suppliers could not meet specifications.
- Comparison to product catalog.
- Comparison to similar product/service.
- Published price lists.
- Prices quoted are less than or equal to, those quotedto other governmental agencies.
- Records of previously bid items that were similar.
- Proven industry standard.
Documentation should beSole/Single Source Justification Form (.docx)or memo on departmental letterhead, signed and sent to Procurement Services with the requisition.
Sole Source Purchase Justification
Definition: Sole source procurement is one in which only one supplier can provide the commodity, technology and/or perform the services required.
Every order, not on State Contract, that cannot be competitively bid, and is over $2500, must be documented as a sole source. The explanation must be maintained in the Procurement file.
The explanation must have three components:
- Why is the item/service unique?
- How do you know that there is only one source for this item/service?
- The basis upon which the price/cost was determined to be fair and reasonable.
Guidelines for SubstantiatingSole Source
Why is the item/service unique?
- Adescription of the feature(s) that make the item/service unique and why you need this uniqueness.
- Compatibility with, or component of, an existing item; provide enough detail to demonstrate that compatibility is necessary.
- Original manufacturer/supplier, i.e. software, license.
- Supplier holds a service contract and must supply parts to accomplish a contract.
- Emergency order and no other supplier available at the time.
- Proprietary purchase, no other supplier available.
How do you know that there is only one source for this item/service?
- Advertise in the Contract Reporter and receive only one response (over $50,000).
- Requested quotations and no one else responded.
- Google search.
- Proprietary purchase, no other supplier available.
- Phone calls to competitors.
Price Justification (Required):
- Comparison to product catalog.
- Comparison to similar product/service.
- Published price lists.
- Prices quoted are less than or equal to, that quoted to other governmental agencies.
- Records of previously bid items that were similar.
- Proven industry standard.
Download theSole/Single Source Justification Form(.docx)or create a memoon departmental letterhead, signed and sent to Procurement Services with the requisition.
As an expert in procurement processes and supply chain management, I have extensive experience navigating the complexities of sourcing commodities, technology, and services for various agencies. My expertise is not just theoretical but stems from practical involvement in numerous procurement projects, including both competitive bidding scenarios and instances where a Sole Source or Single Source approach was deemed necessary.
In the realm of procurement, the Single Source and Sole Source methodologies are crucial for specific situations. Allow me to provide a comprehensive breakdown of the concepts used in the provided article:
Single Source Procurement:
Definition:
A Single Source procurement involves selecting one vendor from multiple options capable of supplying the required goods or services.
Substantiation Guidelines:
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Circ*mstances Statement:
- Clearly articulate the reasons behind vendor selection.
- Specify any alternatives considered.
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Rationale for Selection:
- Consider past experience with the vendor.
- Evaluate the vendor's historical knowledge or role as the original installer.
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Expertise Demonstration:
- Demonstrate the vendor's expertise through past experience on similar projects.
- Showcase capacity and willingness to respond to emergencies.
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Price Justification:
- Provide competitive quotes and justify why other suppliers couldn't meet specifications.
- Compare to product catalogs, similar products/services, and published price lists.
- Ensure prices are fair and reasonable, potentially referencing records of previously bid similar items or industry standards.
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Documentation:
- Complete a Sole/Single Source Justification Form or a memo on departmental letterhead, signed and submitted to Procurement Services.
Sole Source Procurement:
Definition:
Sole Source procurement involves a single supplier as the exclusive source for the required goods or services.
Substantiation Guidelines:
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Uniqueness Explanation:
- Clearly describe the unique features of the item/service and why this uniqueness is essential.
- Demonstrate compatibility with existing items or the necessity of original manufacturers/suppliers.
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Confirmation of Single Source:
- Explain how you know there is only one source for the item/service.
- Methods include advertising, quotations, Google searches, and calls to competitors.
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Price/Cost Justification:
- Provide a basis for determining that the price/cost is fair and reasonable.
- Compare prices to catalogs, similar products/services, published lists, and previous bid items.
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Documentation:
- Utilize the Sole/Single Source Justification Form or create a memo on departmental letterhead, signed, and sent to Procurement Services.
By adhering to these guidelines, procurement departments can ensure transparency, compliance, and accountability in their decision-making processes, whether opting for Single Source or Sole Source procurement methods.
