“The supreme art of war is to subdue the enemy without fighting.”
The Art of War by Sun Tzu
When we talk about the goals of federal business development and capture management at our Bid & Proposal Academy training courses, we pragmatically reduce them to only five:
- Identify opportunities to bid on
- Eliminate competition
- Reduce competition if you can’t eliminate it
- Get the government customer excited about receiving your proposal
- Make it a goal to produce a usable proposal artifact at every step of the capture process, so that writing a winning proposal is a slam dunk.
Goal 2, Eliminate competition, refers to sole source awards. In their simplest form, sole-source awards are modifications to add scope to your existing contracts. It works like this: the government has a problem and comes to you. Your technical and BD people meet with the government to discuss the solution and find a contract vehicle to route the work to.
The government issues the modification, and you’ve won new business won without a fight. Both the government and you save a headache and money while getting great value.
The more complex form of sole source awards is getting your firm under a new contract without competing. We‘ll discuss them below, as well as the pending rule changes that are about to make life a bit easier for socioeconomically disadvantaged small businesses.
When Can You Pursue a Sole Source Award?
We’ve already talked about sole source awards at the end of the federal fiscal year. Sole source awards increase during that time. This allows government entities to make the most of their remaining budgets. This is the simplest and fastest way for the government to navigate through the “use it or lose it” budgetary conundrum.
You can also get sole source awards from your current government customers at any time of the year, provided that the conditions are right. Sole source awards have to fall under one of the seven authorities laid out in the Federal Acquisition Regulation (FAR).
- There is only one responsible source and no other supplies or services will satisfy an agency’s requirements.
- Unusual and compelling urgency
- Industrial mobilization; engineering, developmental, or research capability; or expert services
- International agreement
- Authorized or required by statute
- National security
- Public interest
Many sole source opportunities are awarded under authorities 1 and 2.
In authority 1, your company is the only one who can provide a particular product or service, and full and open competition would just result in the contract being awarded to you anyway.
Authority 2 work results from an emergency situation such as a war effort, or a sudden natural disaster for which there is no multiple award contract vehicle that covers that specific scope of work.
What About 8(a), SDVOSB, HUBZone, and WOSB/EDWOSB Sole Source Awards?
These awards fall under authority 5 listed above. It states that some contracting awards are only available to small businesses who participate in the Small Business Administration’s contracting assistance programs.
Sole source awards have monetary limits. Currently, the limits for socioeconomically disadvantaged businesses such as 8(a) business are $4 million for services and $6.5 million for manufacturing. The exceptions to that are Alaskan Native Corporations (ANC) and Native American Tribal Entities (“super 8(a)s”). They can receive sole-source awards for $22 million, and even higher with justification.
Changes May Be Coming to Special Sole Source Award Thresholds in 2019
The House of Representatives recently passed a bill (H.R. 190) referred to as “Expanding Contracting Opportunities for Small Business Act of 2019”. On January 17, 2019, the Senate sent the bill to the Committee on Small Business and Entrepreneurship. The last roll call vote was 415-6 in the House, so there is clear bipartisan support.
The majority of these changes would impact 8(a)s, Service-Disabled Veteran-Owned Small Businesses (SDVOSB), Women-Owned Small Businesses, and HUBZone businesses.
Specifically, H.R. 190 would change the award price calculation requirements. H.R. 190 removes the requirement for option years to be included in the award price. That means contracting officers could price the award at just the base period of the contract.
Let’s do the math. If the initial year of the contract is valued at $4 million for services, but the contract includes four 1-year options also valued at $4 million, the overall value of the awarded contract would be $20 million – much closer to the super-8(a) $22 million thresholds.
It used to be that $4 million was the total value of the contract, and now it’s just the projected maximum award price for the initial year. Under the current law, a sole source award of this amount wouldn’t be possible. Let’s see if this is how this law will be implemented.
The bill would also increase the sole source manufacturing threshold from $6.5 million to $7 million for all socioeconomically disadvantaged small business types, along with other changes.
A Note About Sole Source Awards
Finally, your customer may not come to you when they have room in their budget and need the work done. It’s up to you to anticipate their needs and activities. This is when being in tune with your customer’s requirements comes into play. You may have opportunities to suggest sole-source contracts as solutions to your customer’s pressing needs. If you’ve trained your project personnel to report back with any needs your government customer has, you’ll be in a great position to take advantage of small (or not so small) opportunities like these.
If you need to sharpen your business development skills to grow your small federal contracting company, we recommend you attend our Foundations of Federal Business Development course or consider getting the Blueprint for Federal Business Development for self-paced study.
Contact us to learn more.