Sole Source Procurements Burr Millsap, CPA Director of Budgets and Purchasing University of Oklahoma...

Sole Source Procurements

Burr Millsap, CPADirector of Budgets and PurchasingUniversity of Oklahoma Health Sciences Center



Definitions An award for a commodity or service to the only known

capable supplier occasioned by the unique nature of the requirement, the supplier, or market conditions. (NASPO, Volume 1, 5th

Edition)

An acquisition which, by specification, restricts the acquisition to one supplier. (State of Oklahoma Central Purchasing Act)



Noncompetitive. . . but NOT Sole Source (NASPO, Volume 1, 5th Edition)

Item available from another government entity’s contract Item produced by prison industries or other government entities Small dollar purchases Item acquired for trial purposes Formal competition has failed Emergency Resale Used item - advantageous - available only on short notice Geographic procurements Unsolicited offers



Who Determines?

The Funds-Provider (e.g. donor, grantor, contractor)

The Requestor (e.g. faculty member, principal investigator)

The Conditions Compatibility with work already ongoing

Failure / inadequacy of the market place



How Far Out?

Probably not beyond the end of the fiscal year

Next year may provide an opportunity for competition



Examples (NASPO, Volume 1, 5th Edition)

Equipment for which there is no comparable competitive product

Public utility services from natural or regulated monopolies

A component or replacement part for which there is no commercially available substitute, and which can be obtained only from the manufacturer



Examples (continued) (NASPO, Volume 1, 5th Edition)

An item where compatibility is the overriding consideration, such as computer operating software enhancements for an existing system

A supply, equipment, part, service or supplier that, due to technically constraining factors associated with scientific research, are needed to ensure the fairness and validity of the underlying research



Examples (continued)

A supply, equipment, part, service or supplier that is specifically required by a grantor, donor, or other provider of funds where the funds usage is clearly restricted



Two Types of Sole Source Assertions

Supplier / manufacturerOne and only one supplier is capable of delivering the good or service, and that the supplier is peculiarly and uniquely qualified in the entire market place to do so

Brand nameOne and only one brand of good or service is capable of addressing the need, and that the brand is peculiarly and uniquely qualified in the entire market place to do so



Determination

Not based on personal or even professional preference

Must be objective (capable of independent replication / verification)

Not subjective in any way



Determination

Professional judgment that:

Conducting competitive bid procedures will actually delay and aggravate the results of the procurement

Competition will not add value to the procurement

Competition will not produce a different result

Be very conservative and not aggressive in using this approach



Fairness of Price

Remember, sole sources are negotiated contracts

Compare with similar (but not same) items

Compare proportion with larger or smaller items

Obtain representations from faculty member / investigator

Consult your fellow Purchasing Professionals (NAEB / TOAL)

Make it pass your own “smell test” - YOU be the judge



Sole Sources are Preferable to Competition When the Specs are so Tight the the Outcome is Obvious

Pro forma (sham) competition:

Wastes your and your vendors’ time

Aggravates and jades your vendors

Skirts sole source procedures

Robs your institution of valuable information about true sole source situations



The Two Main Risks

Conducting a sole source procurement when in fact a competitive opportunity exists

Conducting a competitive procurement when in fact a sole source situation exists

Do Your Due-Diligence

Do the work / gain the knowledge to minimize both risks

Fully document your work and your findings



Make Your Requestor Share the Heat

Have requestor formally affirm, if he/she is insisting

Have requestor represent before the governing board

Have requestor represent before the auditors

Requestors are afraid of time and being held to lowest bid

Be responsive, give them best value

Do not compromise on fairness to willing and capable bidders/respondents



Actual Example #1

“The Beckman Coulter 8-capillary DNA Sequencer is unique, not being manufactured or sold by any other source worldwide. . . Undergoing a competitive process for the sequencer would not have added value to the procurement. The specifications were so narrow that the only result would have been for Beckman Coulter to emerge as the sole or most responsive bidder. In comparison to a higher-throughput instrument, the price for an 8-capillary sequencer is judged to be reasonable.”



Actual Example #2

“A committee composed of College of Dentistry faculty and chaired by the Dean was established to identify and review dental clinic billing systems. The committee determined that there are only two major dental school clinic systems in the U.S. and Canada. The two companies were on campus three times to demonstrate their systems. It was determined that the Quick Recovery System. . . was the only system that was web-enabled. . . This factor was crucial to the College, which is Macintosh based and requires faculty and students to access the scheduling module from off campus. Also, the flow of information into the system was consistent with clinic operations.”



Actual Example #3

“The Senographe DMR+ is the only system on the market with two essential diagnostic and training features: digital imaging and medium field coverage. . . Additionally, the GE Senographe DMR+ contains the most powerful spot in the industry, allowing superior penetration of the dense breast tissues. . . The Seno Vision Digital Spot and Sterotactic System. . . permits direct digital acquisition that enables intervention while acquiring spot images of the highest resolution in the industry. It reduces film consumption and operating costs by allowing images to be viewed on the monitor, printed on a laser printer, archived on CD-ROMs, and transferred instantly to other facilities. No other stereotactic system on the market achieve the same resolution, depth, and field of vision.”

Boomer Hoomer


“Reality is what refuses to go away when I stop believing in it.” Anonymous.

“Right now I’m having amnesia and déjà vu at the same time. I think I’ve forgotten this before.” Steven Wright.

“Anything dropped in the bathroom falls in the toilet.” Flucard’s Corollary.

“Any time you get a mouth full of hot soup, the next thing you do will be wrong.” Zall’s First Law.

Boomer Hoomer


“If you think the problem is bad now, just wait until we’ve solved it.” Kasspe.

“I don’t have any solution, but I certainly admire the problem.” Anonymous.

“After your hands become coated in grease, your nose will begin to itch.” Lorenz’s Law of Mechanical Repair.

“If you do a job too well, you get stuck with it.” Slous.

“The shortest distance between two points is under construction.” Altito.



Bottom Line

Sole Sources are useful. They generate good mgmt information.

Say good-bye to sham competition.

Be conservative but not chicken. Be bold but not bullheaded.

Do your due-diligence. Document your case.

Test (!!!) the fairness of price.

Don’t be afraid to work with your requestor, but also to hold him/her accountable.

Sole Source Procurements Burr Millsap, CPA Director of Budgets and Purchasing University of Oklahoma...

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