Sole Source Contracts: Complete Guide to Non-Competitive Government Awards
Learn how to position your business for sole source government contracts. Understand justification requirements, small business exceptions, and strategies for winning non-competitive awards.
Quick Overview: Sole Source Contracts
Sole source contracts are awarded to a single contractor without competition. While competition is generally required, there are legitimate exceptions including small business set-aside thresholds and unique capability justifications. Strategic positioning can help you win these valuable awards.
What is Sole Source Contracting?
Sole source contracts are awarded directly to a contractor without the competitive bidding process that normally applies. This can happen when there's only one qualified source, urgent needs, or authorized exceptions for small businesses.
When Sole Source is Permitted
- ✓Only One Source
Unique supplies or services only available from one contractor
- ✓Unusual and Compelling Urgency
Government would be seriously injured by delay
- ✓Small Business Authority
8(a), HUBZone, WOSB/EDWOSB, SDVOSB programs
- ✓National Security
Authorized or required for national security
Advantages of Sole Source
- →No Competition: You don't have to beat other bidders
- →Faster Process: Simplified procurement timeline
- →Direct Negotiation: Work directly with government
- →Relationship Building: Strengthens agency connection
Justification & Approval (J&A) Requirements
Except for small business exceptions, sole source awards require written justification that's approved at an appropriate level based on contract value.
J&A Approval Thresholds
| Contract Value | Approval Authority |
|---|---|
| Under $750,000 | Contracting Officer |
| $750,000 - $15 million | Competition Advocate |
| $15 million - $75 million | Head of Procuring Activity |
| Over $75 million | Senior Procurement Executive |
What the J&A Must Include
- •Description of agency needs
- •Statutory authority permitting sole source
- •Why other sources cannot meet the need
- •Market research performed
- •Actions to increase competition in future
- •Determination that price is fair and reasonable
Small Business Sole Source Authority
Several small business programs allow agencies to make sole source awards without the usual J&A requirements, up to specified thresholds.
8(a) Program
Most flexible sole source authority for small disadvantaged businesses.
HUBZone Program
Sole source for businesses in historically underutilized areas.
WOSB/EDWOSB
Women-owned small business sole source authority.
SDVOSB
Service-disabled veteran-owned sole source authority.
Important Requirements
Even with small business authority, the government must determine that award can be made at a fair and reasonable price, and that the contractor can perform. Sole source doesn't mean automatic award.
Positioning for Sole Source Awards
Sole source opportunities don't appear on bid boards—they come from relationships and strategic positioning. Here's how to position yourself:
Key Positioning Strategies
1. Build Agency Relationships
Meet with program offices and contracting officers. Attend industry days. Be known before they need you.
2. Demonstrate Unique Capability
Position your offering as uniquely suited to the agency's needs. Proprietary technology, specialized expertise, or unique past performance.
3. Respond to Sources Sought Notices
Agencies conduct market research before deciding on procurement approach. A strong capability statement might influence the decision to sole source.
4. Get Certified
8(a), HUBZone, WOSB, and SDVOSB certifications open sole source opportunities that aren't available to uncertified businesses.
5. Help Write the Justification
Provide the agency with information that supports why you're the only qualified source. Make it easy for them to justify the award.
Working with Small Business Specialists
Agency small business specialists (OSDBU) can help connect you with program offices seeking sole source candidates.
- →Introduce yourself and your capabilities
- →Ask about upcoming requirements
- →Request introductions to program offices
- →Attend agency-sponsored matchmaking events
The Sole Source Award Process
Understanding the process helps you navigate it successfully.
Typical Process Flow
Agency Identifies Need
Program office determines they need a specific contractor's capabilities.
Market Research
Agency confirms no other sources can meet the requirement (or uses SB authority).
J&A Preparation (if required)
Contracting officer prepares justification for appropriate approval level.
Solicitation & Negotiation
Agency requests and negotiates your proposal directly.
Contract Award
After price reasonableness determination, contract is awarded.
Pricing & Negotiation
Just because it's sole source doesn't mean you can charge whatever you want. The government still must determine price reasonableness.
Pricing Considerations
- •Price must be fair and reasonable
- •May require cost or pricing data over $2M
- •Government will compare to similar contracts
- •Excessive pricing damages relationship
Negotiation Tips
- →Be prepared to justify your pricing
- →Document your cost basis
- →Price fairly for long-term relationship
- →Consider future competitive opportunities
Warning: Price Gouging
Attempting to take advantage of sole source status with excessive pricing can result in loss of future opportunities, damaged reputation, and in extreme cases, False Claims Act liability. Price fairly.
Common Sole Source Mistakes
1. Assuming It's Automatic
Even with a sole source opportunity, you still need to submit a compliant proposal and negotiate successfully. Don't take it for granted.
2. Overpricing
Taking advantage of lack of competition with excessive prices damages relationships and may trigger audits or protests.
3. Not Helping with Justification
Contracting officers need to justify why you're the only qualified source. Make it easy by providing relevant information about your unique capabilities.
4. Ignoring Performance
Poor performance on sole source contracts eliminates future opportunities. These contracts are watched closely.
5. Waiting for the Phone to Ring
Sole source opportunities come from proactive relationship building, not from monitoring bid boards. Get out and market yourself.
Frequently Asked Questions
Can competitors protest a sole source award?
Yes. Competitors can protest that the sole source justification is improper or that competition should have been sought. Proper J&A documentation protects against successful protests.
How do I find sole source opportunities?
Sole source opportunities typically don't appear publicly until after award. They come from relationships, responding to Sources Sought/RFI notices, and proactive marketing to agencies.
Is 8(a) sole source automatic?
No. Having 8(a) certification enables sole source consideration, but the agency still decides whether to use that authority. You need to market your capabilities and convince the agency that you can perform.
What if I'm over the sole source threshold?
For amounts above small business thresholds, sole source requires full J&A justification based on limited sources or other FAR authority. This is more difficult but not impossible with truly unique capabilities.
Can follow-on contracts be sole source?
Sometimes. If you've developed unique expertise or the government would incur significant costs switching contractors, follow-on sole source may be justified. But agencies increasingly compete even these opportunities.
Find All Government Opportunities
While sole source opportunities require relationship building, competitive bids are still the path to most contracts. BidFinds helps you find and win both competitive and set-aside opportunities.
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