Sole Source

Sole source is a non-competitive procurement method. The procurement authority awards a contract directly to one supplier without running a competition. The term is used in Canadian federal procurement and in NATO procurement policy, and it is closely related to non-competitive procurement, single source and direct award.

In Canadian federal procurement, sole sourcing generally means buying without soliciting bids. A common reason is that only one entity can perform the contract because of unique requirements such as patents, copyright, technical compatibility or specialized expertise, as described in the CanadaBuys sourcing strategy guidance. Because it sets competition aside, a sole-source award must be justified and documented.

Grounds for sole sourcing under the Government Contracts Regulations

Federal guidance lists four circumstances in which a purchase can be sole-sourced: a pressing emergency, an expenditure below the applicable low-value limits, a situation where soliciting bids is not in the public interest, and a case where only one supplier is capable. These are exceptions in the Government Contracts Regulations (GCR), and Public Services and Procurement Canada sets them out in its introduction to the procurement process.

Departments apply the same framework. The National Research Council of Canada describes sole sourcing as a non-competitive strategy that must be fully justified and documented, and it ties that justification to the approved exceptions to bid solicitation in the Treasury Board Contracting Policy and the GCR, as outlined in its procurement and contracting audit. Natural Resources Canada reports separate delegated-authority limits for competitively sourced and sole-source goods, services and construction in its audit of procurement services.

A program-level example is the National Master Standing Offer for radio hardware and software. PSPC states that it was a sole-source procurement with Harris as the sole offeror, on its radio hardware and software commodity page.

Extra diligence at $25,000 and $40,000

The only-one-capable-supplier exception is GCR 6(d). When a department relies on it, CanadaBuys requires additional diligence for procurements above $25,000 for goods and above $40,000 for services and construction. The contracting authority must answer the Treasury Board sole-source questions with client support. Both the thresholds and the examples of unique requirements appear in the CanadaBuys guidance on determining a sourcing strategy.

How an ACAN opens a sole-source award to challenge

An Advance Contract Award Notice (ACAN) is the public step that often accompanies a proposed sole-source award. A department or agency uses it to state its intention to award a contract to a pre-identified supplier. Other suppliers then have an opportunity to submit a statement of capabilities if they believe they can meet the requirement.

If another supplier demonstrates that it is capable, the intended sole-source approach may be withdrawn. The Office of the Procurement Ombud describes this process on its procurement practice review page.

How NATO defines and uses sole source

NATO defines sole source as a procurement method that lets the procurement authority award a contract directly to a vendor without competition. Its common-funding policy lists urgency, interoperability with existing capabilities, cost or schedule savings, obsolescence, contract extensions and a single capable vendor among the possible grounds. NATO also requires the procurement authority to negotiate with the identified vendor to ensure best value. The full text is in the NATO procurement policy.

What sole source means for a supplier bidding on Canadian public contracts

• Watch for ACANs. If you can meet the full requirement, submit a statement of capabilities by the stated deadline and show that you can deliver all of it.
• If you are the pre-selected supplier, be ready to substantiate your capability, technical fit and pricing. Negotiation to confirm best value is expected.
• If your offering depends on a patent, copyright, technical compatibility or specialized expertise, document it clearly. These are the grounds buyers cite for the only-one-capable exception.