Sole-Source Procurement in the Federal System

The National Aeronautics and Space Administration (NASA) has proposed a reprogramming of funds to procure modified CENTAUR vehicles for use with the space shuttle. It proposes to proceed with a sole-source procurement. As an exception to the general requirement for formal advertising, the procurement statutes permit the negotiation of contracts under certain specified circumstances. However, even when negotiations are appropriate, the contracting agency is still required to obtain competition to the extent feasible. When it is not feasible, the applicable statute permits the negotiation of contracts if the purchase or contract is for property or services for which it is impractical to obtain competition. Before a contract may be awarded on a sole-source basis, NASA regulations require that the contracting officer obtain appropriate approvals based upon a written "Justification for Noncompetitive Procurement." Detailed instructions are set forth for preparing a justification in a manner calculated to highlight those factors which would support or negate the conclusion that only one firm can satisfy the Government's needs in a timely manner. GAO, through its bid protest forum, reviews Government procurement practices, including the award of sole-source contracts. If a firm believes that it has been improperly denied an opportunity to compete for a Government contract, it may request that GAO review the legality of the agency's actions. In these decisions, GAO has recognized that a sole-source award may be made where the minimum needs of the Government can be satisfied only by supplies or services which are unique; where time is of the essence and only one known source can meet the Government's needs; where only a single source can provide an item which must be compatible and interchangeable with existing equipment; and where only one firm could reasonably be expected to develop or produce a required item without undue technical risk. However, sole-source procurement is not justified simply because the contracting agency believes a particular firm may be able to perform the contract better or at a lower cost than any other firm. The proposed CENTAUR procurement is subject to the same basic rules concerning sole-source awards. In applying these rules, NASA believes that a sole-source award is justified. However, GAO is not familiar with the details of this case and is not in a position to comment on the NASA position.