Improper sole source contract awards (also known as “direct contract” awards) are commonly used to avoid competition and steer contracts to favored bidders, often as the result of corruption. Such awards can be accomplished by simply ignoring competitive bidding requirements, by falsifying sole-source justification data or by splitting purchases to avoid competitive bidding thresholds.
Sole source awards in contravention of the Procurement Plan, or multiple sole source awards to the same company, particularly such awards above or just below the competitive bidding threshold, are of special concern.
Also be alert for “hidden sole sourcing,” i.e., failing to develop “second sources” for replacement items, spare parts or services that must be purchased from the original supplier or a single source.
RED FLAGS OF UNJUSTIFIED SOLE SOURCE AWARDS
- Inadequate justification or documentation for sole source awards
- Sole source awards in contravention to the provisions of the procurement plan
- Split purchases to avoid competitive bidding requirements
- Multiple sole source awards above or just below the sole source threshold
- Pattern of such awards to one or a few bidders, approved by the same official
- Awards below the competitive bid threshold followed by change orders that exceed such limits
- Request for bids mailed to only one contractor
- Repair or maintenance contracts tied to the original bid winner or a single supplier
CASE EXAMPLES OF UNJUSTIFIED SOLE SOURCE AWARDS
See actual case example of unjustified sole source awards from investigated cases.
BASIC STEPS TO DETECT AND PROVE UNJUSTIFIED SOLE SOURCE AWARDS
- Identify and interview all complainants to obtain further detail.
- Obtain the following documents and examine them for the red flags listed above:
- Procurement plan
- Procurement thresholds
- Sole source requests, justifications and approvals
- Contract or purchase order
- Change orders
- Review sole source award justifications to determine if the contracts were in accordance with the procurement plan and were properly awarded.
- Look for a pattern of questionable sole source awards to the same contractor, particularly such awards just under competitive bidding thresholds.
- Look for a pattern of sole source awards followed promptly by change orders increasing the contract price.