GAO on Sole Source Procurement: Agency's Failure to Plan Does Not Qualify as an Emergency

10.30.2009 - Posted in E&B Alerts – Government Contracts

The GAO provided further guidance this week on sole source contracting in Matter of RBC Bearings Inc., B-401661; B-401661.2 (October 27, 2009). A sole source contract is one that is awarded without competitive bidding, and is allowed when the supplies or service required are available from only one company, or when the requirement is of "unusual and compelling urgency." This GAO decision emphasizes that government agencies may not avoid competitive bidding by creating circumstances of unusual and compelling urgency themselves.

In RBC Bearings, the Protester had sought for over 10 years to become an approved source of bearings for use in Black Hawk helicopters. The agency never tested the bearings and repeatedly changed its specifications, making it impossible for RBC to gain approval. Additionally, because the agency ordered only a few bearings at a time, its need for the bearings was "urgent," and the agency repeatedly entered into sole source contracts.

In its decision, the GAO pointed out that the Competition in Contracting Act of 1984 (CICA) forbids agencies from using noncompetitive procurement procedures because of its own failure to perform advance planning. Because the need for bearings was predictable, the DLA should have assessed its annual needs and performed reasonable advance planning to fulfill those needs. The GAO also reaffirmed that when an agency restricts a contract to only approved sources, it must give others "a reasonable opportunity to qualify." It found that "[f]ailure to act upon a potential offeror's request for approval within a reasonable period of time deprives the requester of an opportunity to compete and is inconsistent with the CICA mandate that agencies obtain full and open competition through the use of competitive procedures." The GAO therefore directed the DLA to make a good faith effort to determine RBC's eligibility to compete for future awards.

Thus, the RBC Bearings decision demonstrates that while agencies may enter into sole source contracts in limited circumstances, they may not create the circumstances necessitating non-competitive contracts by failing to act reasonably.

If you have questions on how this decision may affect you, please contact Mark Blando at [email protected] or (612) 236-0160.