Sole Source Procurements

 

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? 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. We believe 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.

Q. What constitutes an emergency or exigent circumstance for the purpose of FTA procurement? A. In order to give you anything definitive, we would need details of the actual situation. 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. The FAR and the BPPM are both accessible online under the tab Online Tools and Resources.

Q. Are the following examples of a contract amendment or modification that requires 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. We are having an internal problem with the above questions. Contract administration is overseen by our Operations Department, and they have negotiated contract extensions and increases in contract pricing terms without a sole source justification or cost analysis. They don't believe these are sole source procurements. Are they right? 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 more money. The fact that it is costing the contractor more would not normally entitle him to a price increase unless there was a clear provision in the contract entitling him to a price adjustment for the reasons he is claiming. Of course, if the agency took actions that caused the additional costs, then there may be an entitlement. 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 he is, then the contractor must submit cost data to support the higher price and the agency must perform a cost analysis of the data.

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. 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.

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 (transit authority) 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 $70,000.00. 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.

Q. Is there a requirement to periodically report sole source procurements to FTA? A. There is no such requirement.

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 manufacturers 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 someone who believes the sole source award is inappropriate and protests the grantee's decision. 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). Q.  Our agency presently 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.  Your agency has the authority to make decisions and award contracts non-competitively without prior review by FTA. It is not FTA practice to become involved in reviewing and approving grantee sole source contract awards. You will need, however, to document the contract file with a sole source justification setting forth the facts that in the agency's opinion make competition impossible. Have it approved by a management official who has the authority to approve the action. We would not refer to this as a "change order," since that term is reserved for actions to change the contract specifications, place of delivery, etc. The term is not used for modifying a contract for significant additional quantities or major additions to the scope of work such as those being contemplated by your agency.   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. The department manager is having angst over this decision. 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. The FTA may choose to chastise the 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 FTA, except for rolling stock or replacement parts, no longer has a 5-year term limit for FTA-funded contracts. FTA leaves the term of the contract to the grantee's best business judgment.