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Sole Sourcing: Purchasing Challenges, Changes and Solutions

Sole Sourcing: Purchasing Challenges, Changes and Solutions

Sole Sourcing: Purchasing Challenges, Changes and Solutions

In 2013, an increasing number of municipal, state and federal purchasing departments found themselves subject to strengthened laws regarding the awarding of sole-sourced contracts during procurement initiatives. Sole-sourcing refers to the awarding of 'no-bid' contracts, whereby a solicitation is not published for competitive bidding but rather is awarded directly to a sole supplier. In most cases, the reasons for awarding sole-source contracts are qualified by the awarding agency as a part of the purchasing process. The justification given for such contracts often are that the supplier awarded the opportunity is the only suitor able to meet the requirements of the project, technical or otherwise.

Unfortunately, sole-source contracts are by their very nature vulnerable to instances of fraud and collusion. The anti-competitive practice of awarding contracts to a single vendor obscures the procurement process, reduces oversight, and ensures that the majority of communications during procurement occurs behind closed doors.

The climate of secrecy surrounding sole-sourcing, as well as repeated discoveries of corrupt practices, have spurred the creation of new legislation at all levels of government in an effort to codify democratic purchasing practices and eliminate abuses from the purchasing process.

In May 2013, Oklahoma passed a new law prohibiting the issuance of sole-source specifications for all publicly-funded construction projects in the state. The law was approved by the state legislature in a direct response to increasing instances of fraud and collusion discovered upon the audit of several infrastructure projects, with some studies indicating sole-sourcing fraud had increased total construction costs by as much as 60 percent. New Hampshire state lawmakers recently introduced strengthened guidelines for the awarding of sole-source contracts. The United States Air Force even lost a court battle initiated by a contractor over sole-sourcing after refusing to examine competing bids for a project and awarding a no-bid contract to a preferred supplier.

Thankfully, concerns about transparency and compliance associated with sole-sourcing can be proactively addressed through the implementation of a robust electronic procurement system. SourceSuite, a cloud based software-as-a-service solution, provides all the functionality needed to ensure that purchasing departments meet compliance requirements and efficiency objectives. SourceSuite’s configurable pre-qualification feature allows purchasing organizations to set out requirements that interested suppliers must meet before submitting a bid. Invitational bidding also allows the distribution of bid opportunities to a specific range of suppliers, making it easy to configure compliance prerequisites before accepting bids. In-depth transaction records provide detailed records for auditing purposes, making sure that every dollar of your operational budgets is accounted for.

In 2013, the state of New Mexico also implemented new laws intended to curb collusion and fraud stemming from sole-sourcing abuse; contracts intended for sole-sourcing must now be published and subject to competitive bidding for a period of 30 days before a sole-source contract may be awarded, in addition to the detailed justifications for sole-sourcing that such opportunities must provide.

Chaves County, N.M. utilizes SourceSuite’s New Mexico e-procurement system and has experienced tremendous time and resource savings as a result, not to mention the benefits of automated operational compliance. Tammy Brisco West, Chaves County Purchasing Director, is going above and beyond the compliance requirements mandated by New Mexico’s new sole-sourcing law by proactively using the bid system to publish RFI’s, contacting the supplier pool and seeking out potential bidders before accepting a sole-sourcing bid. Brisco-West explains how the transparency of procurement processes are facilitated by SourceSuite: “The amount of reporting that is right at your fingertips is amazing, your board can no longer question how many vendors bids were sent out to… the process takes me less than five minutes to distribute a bid and about a minute to post an addendum, no postage necessary. The distribution is so simple… It really is a great system. It's a wonderful tool and I'm thankful for the service provided for us and New Mexico.” We couldn’t have said it better ourselves.

Nathan Munn | SourceSuite.com

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