Sole Source Contracts: FAR Rules, Source Selection Process & Vendor Tips
Discover how sole source contracts work in federal procurement.
A sole source contract is a federal contract awarded without a competitive bidding process. Under the Competition in Contracting Act and the Federal Acquisition Regulation (FAR), agencies must generally promote full and open competition when acquiring goods and services. However, there are situations where only one responsible source can meet the government’s requirements, and running a competition would not be practical or might compromise the agency’s mission. In those cases, the contracting officer may justify and approve a sole source award.
Understanding how sole source contracts fit into the broader government source selection framework is important. While the source selection process outlined in FAR 15.3 source selection emphasizes competition, best value tradeoffs, and fair evaluation, there are specific statutory exceptions where a single source is justified.
Legal Basis for Sole Source Awards
FAR 6.302-1 lists several statutory authorities that permit agencies to award contracts on a sole source basis. These exceptions illustrate when competition is not required under federal source selection procedures:
Only one responsible source: When no other supplies or services will satisfy agency requirements. This often applies to proprietary technology, unique expertise, or follow-on work that must go to the same contractor for compatibility and continuity .
Unusual and compelling urgency: When the government would be seriously harmed unless supplies or services are acquired immediately, and competition cannot be conducted in time.
International agreements: When a treaty or written agreement between governments requires a specific source.
Industrial mobilization or research capability: When awarding to one source preserves a facility or expertise critical to national defense or the industrial base.
Other statutory authorities: For example, small business set-asides under the 8(a) or HUBZone programs, where only one firm is eligible for award.
Even under these authorities, agencies must demonstrate why competition is not feasible and why awarding to a single source serves the government’s best interests.
Common Use Cases for Sole Source Contracts
Sole source awards are most often seen in specialized, high-stakes areas of federal procurement evaluation, including:
Proprietary technology or intellectual property: Contracts may go to a single company that owns unique technology, software rights, or data critical to compatibility.
Continuation of highly specialized services: Follow-on contracts for engineering, research, or development often remain with the original contractor to preserve knowledge and avoid disrupting mission-critical work.
Urgent operational needs: In emergencies, agencies may bypass competition to ensure rapid delivery of critical supplies or services.
Industrial mobilization and national defense: Sole source contracts may preserve manufacturing capacity or technology needed for defense readiness.
Small business socio-economic programs: Agencies may issue sole source awards under programs like 8(a), HUBZone, or SDVOSB if conditions are met and price is deemed fair.
Justification and Approval (J&A) Process
Before awarding a sole source contract, agencies must prepare a written justification and approval (J&A). This document explains why competition is not feasible and provides assurance that the award complies with federal source selection criteria. The J&A typically includes:
Identification of needs: A clear description of the goods or services required and the reason only one source can provide them.
Authority and facts: The specific FAR authority being invoked and supporting evidence.
Market research: A summary of the federal procurement evaluation efforts conducted to identify other potential sources and why they were inadequate.
Price reasonableness determination: Evidence that the price is fair, supported by cost analysis, historical data, or independent government estimates.
Certification: A statement by the contracting officer that the justification is accurate and complete.
Approvals: Signatures from contracting officials at the required levels based on contract value.
This documentation ensures transparency and holds agencies accountable when departing from competitive source selection procedures.
Connection to the Source Selection Process
While sole source awards are an exception, they still intersect with the broader government source selection framework:
Best value source selection: In competitive procurements, agencies often apply a best value source selection approach, balancing technical merit, past performance, and cost. With sole source contracts, “best value” is demonstrated by showing why only one provider offers the necessary solution.
Source selection plan and board: In competitive acquisitions, a source selection plan guides evaluation, and a source selection board reviews proposals. For sole source awards, these bodies are not used, but contracting officials must still document justification thoroughly.
Source selection evaluation: Although competition is absent, evaluation still occurs—market research, price analysis, and technical reviews ensure the award is justified and compliant with FAR standards.
By aligning the J&A process with principles of FAR 15.3 source selection, agencies ensure integrity and accountability even when awarding to a single source.
Tips for Vendors Seeking Sole Source Opportunities
For contractors, positioning your business for sole-source awards requires foresight and preparation:
Develop unique capabilities: Proprietary technologies, patents, or specialized expertise increase the likelihood of being identified as the only responsible source.
Build strong past performance: Agencies often award sole source contracts to proven vendors to avoid risk and maintain continuity.
Leverage socio-economic certifications: Certifications such as 8(a), HUBZone, or SDVOSB open doors to sole source awards under small business programs.
Engage early: Communicate with program managers and contracting officers before requirements are formalized to position your firm as the logical choice.
Prepare for evaluation: Even sole source awards require agencies to determine price reasonableness. Be ready with detailed cost data and value demonstrations.
Maintain compliance: Stay current on FAR updates, cybersecurity rules, and quality standards to avoid disqualification.
Final Thoughts
Sole source contracts are an exception to the federal government’s general preference for competition. While they bypass the standard source selection process outlined in FAR 15.3, they require rigorous justification, careful documentation, and approval. For agencies, they provide a way to meet urgent or unique needs without delay. For vendors, they represent valuable opportunities, but only if they can demonstrate unique value, compliance, and readiness.
By understanding how sole source awards intersect with broader source selection procedures, including the importance of source selection criteria, source selection evaluation, and price analysis, contractors can strategically pursue these opportunities. Properly used, sole source contracts uphold the principles of transparency and accountability while delivering solutions that meet urgent government needs.