Sole-source procurement

Sole-source procurement is a procurement method in which the contracting authority awards a contract directly to one supplier without competition. The buyer selects the supplier, and no competitive process takes place to find the best offer. NATO's procurement policy describes it in the same terms, as a method that allows a procurement authority to award a contract directly to a vendor (NATO procurement policy).

Sole sourcing is an exception to competitive procurement. NATO also defines a sole source as a situation in which there is only one known source capable of providing the materiel, service or works required (NATO IBAN audit). Canadian federal buyers use related terms such as non-competitive procurement, single source and Advance Contract Award Notice (ACAN).

Circumstances that justify a sole-source award

NATO lists several possible reasons for sole sourcing: urgency, interoperability with existing capabilities, cost or schedule savings, obsolescence, contract extensions, and the existence of only one capable vendor. Even then, the procurement authority must negotiate with the identified vendor to obtain best value (NATO procurement policy).

The Government of Canada describes sole-source purchasing as a form of non-competitive procurement governed by the Government Contracts Regulations. The stated circumstances are a pressing emergency, contracts below specified thresholds, cases where bidding is not in the public interest, and cases where only one known supplier exists (Government of Canada procurement process guide).

How federal buyers document a sole-source contract

The federal Supply Manual requires procurement officials to explain and justify the use of the relevant exception under the Government Contracts Regulations when they award a sole-source contract for goods or services. One listed justification is that only a particular supplier can provide the requirement and no reasonable alternative or substitute exists (Supply Manual, chapter 3 annexes). The ACAN is the notice buyers use in this setting.

Public Services and Procurement Canada (PSPC) uses sole-source strategies for procurements that serve federal departments, agencies, Crown corporations and other participating organizations. For example, PSPC established a five-year national master standing offer for naloxone nasal spray as a sole source, because it identified one known supplier capable of providing the required product (PSPC naloxone fact sheet).

Low-dollar purchases and the federal thresholds

Federal guidance states that low-dollar purchases are often made directly from vendors rather than through a competitive tendering process. The same guidance identifies thresholds of $25,000 for goods and $40,000 for services and construction, including applicable taxes, subject to stated exceptions and adjustments (Government of Canada procurement process guide).

How other Canadian public bodies define sole sourcing

The Canada Mortgage and Housing Corporation (CMHC) defines sole sourcing as obtaining goods or services that can only be supplied by one supplier where no reasonable alternative or substitute exists. Its policy requires evidence of that status through an ACAN, a supplier attestation for proprietary goods or services, or an internal briefing-note process (CMHC procurement policy).

What sole-source procurement means for a supplier

A supplier approached under a sole-source procurement should provide the requested quotation and the technical and contractual information the buyer asks for. It should also supply any evidence needed to show that it is the only known capable source, or that its goods or services are proprietary. The procurement authority, not the supplier, must document and justify the exception to competition. Requirements differ by buyer and by solicitation, so read the terms of each notice or request closely.