SOLE SOURCE OR PROPRIETARY PURCHASE…the ball is in your court! Presented by Mary Hicks-Coston, VCO and Nan Rowe, VCO

SOLE SOURCE DEFINITION: A sole source procurement is authorized when there is only one source practicably available for the goods or services required. – Competition is not available in a sole source situation; – Sole source justification is based solely on a single manufacturer or designated supplier’s being the only source practicably available for the goods or services required; –Note: For sole source requirements exceeding $5,000, a written quotation must be obtained from the vendor. (APSPM-Chapter 8, item 8)

A proprietary specification is one that restricts the product or service(s) to one or more specified manufacturers where competition is available thru the manufacturer’s distributors. —A proprietary specification is used when the desired product must be compatible with or is an integral component of existing equipment or products; —or where prequalification of products is necessary to support specific needs of a program; PROPRIETARY PURCHASE DEFINITION:

PROPRIETARY PURCHASE DEFINITION: (Cont’d) —is covered by a patent or copyright, must yield absolute continuity of results; —or is one with which a user has had extensive training and experience, and the use of any other similar piece of equipment would require considerable reorientation and training; —“The determination for the use of a proprietary specification shall be made in advance, in writing, and be included in the procurement”. (APSPM – Ch 4.4c)

PROPRIETARY PURCHASE QUALIFIERS: A proprietary purchase is uniquely different from a sole source based on the following factors: —the product or service(s) required is restricted to the manufacturer stipulated as proprietary; —product or service(s) is sold through the designated manufacturer’s distributors; —The availability of competition between the manufacturer’s distributors, makes this a competitive bid procurement, not a sole source.

SOLE SOURCE PROCUREMENTS UP TO $50,000. All sole source procurements for non-technology goods and services to $50,000 must be approved in advance by the agency head or designee, which shall be the chief purchasing officer or a direct report to the agency head (see 1.2e(2) of APSPM). The written determination, using the Sole Source Procurement Approval Request form (Annex 8-C), provides documentation that there is only one source practicably available.

SOLE SOURCE PROCUREMENTS UP TO $50,000. (Cont’d) A memorandum must be attached to the request which addresses the four points shown in section 8.2 of the APSPM. The Sole Source Justification form shall document the basis for the determination, which should include any market analysis conducted in order to ensure that the good or service required was practicably available from only one source.

Procurements Over $50,000. (Cont’d) Unless otherwise authorized, sole source procurements for non-technology goods and services over $50,000 must be approved by DGS/DPS. Sole source procurements that originally included a renewal provision, for which approval for multi- years was obtained, do not need to be forwarded for approval until expiration of the term for which approval was obtained.

SOLE SOURCE DETERMINATION STEP 1: —Ensure that the end-user has provided accurate specifications in order to make a valid determination of a sole source procurement. STEP 2: —Research manufacturer’s specifications to verify and ensure that competition does not exist for the product/services requested.

SOLE SOURCE DETERMINATION (Cont’d) The research documentation must “PROVE” that it’s the only product/service that meets the needs and that the specified manufacturer is the only practicably available source.

PROCESS STEP 3:Obtain Current Quotation —If the end-user has not already done so, obtain a current quote to include: —full specifications; —date; —F.O.B.; —contact name and number; —lead time or delivery date; —net price inclusive of any negotiated terms and conditions.

PROCESS (Cont’d) STEP 4- IF PURCHASING A SERVICE, OBTAIN MORE INFORMATION… – Verify manufacturer/vendor’s liability insurance if work will be performed on state- owned/leased property. – Verify contractor’s license if applicable. – Ask for and check vendor’s references.

NEGOTIATIONS DOCUMENTING NEGOTIATIONS  Include the name and position of persons representing the manufacturer/ vendor and your agency.  Include a detailed list of all negotiated items/points.  Include points of negotiations in award document.

SOLE SOURCE JUSTIFICATION FORM 1.Explain why this is the only product or service that can meet the needs of the purchasing agency.  Answer this question by referring back to school days regarding how to write a good essay answering the questions below: – Who needs the product/service; – What is needed; – When is it needed;

SOLE SOURCE JUSTIFICATION FORM (Cont’d) – Why it’s needed; and sometimes; – How - the project will be impacted and why it is imperative that this product/services be procured to meet the unique requirements of the project. * What you “say” and how you “say” it is critically important.

SOLE SOURCE JUSTIFICATION FORM (Cont’d) 2.Explain why this vendor is the only practicably available source from which to obtain this product or service. – State simply direct and to-the-point: (Example) Xerox is the sole manufacturer and distributor of the Model 1050 copier. Xerox has no distributors and sells direct only.

SOLE SOURCE JUSTIFICATION FORM (Cont’d) 3.Explain why the price is considered reasonable. – The written determination may be based on price analysis (comparison with prices previously paid; – prices charged for functionally similar items; – prices paid by other consumers; – prices set forth in a public price list or commercial catalog with a percentage of discount offered;

SOLE SOURCE JUSTIFICATION FORM (Cont’d) – Or through the analysis of price-to-unit variations; – Or contact another agency who has purchased this product; – Advice and assistance can also be obtained from the appropriate buyer or contract officer at DGS/DPS. The written analysis must be supported by factual evidence in sufficient detail to demonstrate why the proposed price is deemed to be reasonable.

SOLE SOURCE JUSTIFICATION FORM (Cont’d) – If a determination is made that the prices offered are not fair and reasonable, you must contact the manufacturer/vendor to negotiate a price that is fair and reasonable. (APSPM 4.10) – A combination of these methods given may be necessary to obtain a negotiated price that is considered to be fair and reasonable.

SOLE SOURCE JUSTIFICATION FORM (Cont’d) 4. Describe the efforts that were made to conduct a noncompetitive negotiation to get the best possible price for the taxpayers. — Negotiations must be conducted with the manufacturer/vendor’s authorized representative; — You can negotiate everything: price, payment, terms, delivery, supplies, warranties, services; — You can negotiate via phone, letter, , videoconference or in person.

SOLE SOURCE JUSTIFICATION FORM (Cont’d) — Reach agreement on issues. Close negotiations; — Include all negotiated points in award document/purchase order to ensure there are no misunderstandings; — Document the file.

AWARD ORDER STEP 5 - AWARD ORDER Once written approval has been given, your agency has the delegated authority to proceed with the award as follows:  Issue Award Document  Remember to place a Notice of Sole Source Award in eVA (form 8-E in APSPM)  The Standard Contract form may be found in the APSPM – Annex 8-D or  Notice of Contract Award – form 8-F

SUCCESS Teamwork and communication between the Procurement Officer, Contract Administrator and Contractor as well as conscientious documentation will result in successful contract administration. Please contact the Procurement Office should you have any questions: or

WRITING THE CONTRACT  Required General T’s and C’s are listed on the last page of chapter 8 of the APSPM (On the back of the NOTICE OF CONTRACT AWARD (Annex 8-F).  As stated previously, the standard contract format is found in the APSPM - Annex 8-D

Sole Source Overview Upon a determination in writing that there is only one source practicably available for that which is to be procured, a contract may be negotiated and awarded to that source without competitive sealed bidding or competitive negotiation. The writing shall document the basis for this determination.

Sole Source Overview (Cont’d) The public body shall issue a written notice stating that only one source was determined to be practicably available, and identifying that which is being procured, the contractor selected, and the date on which the contract was or will be awarded. The notice of award shall be posted by any state public body on the Department of General Services' central electronic procurement website, and in addition,

Sole Source Overview (Cont’d) public bodies may publish in a newspaper of general circulation on the day the public body awards or announces its decision to award the contract, whichever occurs first. Local public bodies are encouraged to utilize the Department of General Services' central electronic procurement website to provide the public with centralized visibility and access to the Commonwealth's procurement opportunities.

DOCUMENT YOUR FILE DOCUMENT, DOCUMENT!!!!