Why Sole sourcing Necessary
A single source buy indicates that, to the best of the requester’s knowledge and belief, based on extensive study, only one supplier can supply the needed goods or services.
A sole sourcing buy is a purchasing. It should never be utilized to evade competition.
Every purchase over the Direct Buy Limit ($10,000 including shipping and handling but excluding tax) requires a sole source justification unless the purchase is made from an existing contract, the supplier is explicitly named in the funding source award, or the acquisition is competitively solicited.
Before placing an order, Procurement Services must approve single source reasons.
Price cannot be used to determine the presence of a sole source since it implies the existence of a competitive marketplace.
Criteria for Sole Source Justification
The methods used to establish that the selected supplier is the sole source available for your product/service are described in a Sole Sourcing rationale. The following factors may be used to determine if a solitary source scenario exists:
Only one manufacturer produces the item to the specified criteria; that manufacturer sells directly or exclusively via a single regional/national distributor. Describe the processes required to establish that there is only one source.
To guarantee compatibility with current equipment or systems, the item must be similar to existing equipment and can only be obtained from one supplier. Provide the last PO number or equipment inventory tag number in your single source rationale.
The supplier is listed in the funding source award documentation, inter-agency agreement, or clinical trials agreement. Award materials are not considered proposal documents. The original equipment manufacturer (OEM) does maintenance or repair, and the manufacturer does not have several agents to execute these services.
The OEM is necessary for replacement or spare components, and the OEM does not have distributors for such items. Patented or copyrighted objects or materials can only be obtained through the patent or copyright holder. A medical/surgical choice is made by a medical/dental expert when a particular brand is essential for patient treatment, and the manufacturer has no distributors.
Limited editions only. The selected Consultant has different experience and history in a recognized area of effort, the outcome of which may be mainly dependent on the individual’s ingenuity, inspiration, or aptitude. A consultant has sophisticated, specialized knowledge or skill developed over a long period in a specific area of experience.
A market survey was done to discover if alternative providers could meet the criteria. The single source rationale should include a list of all providers contacted and why each supplier could not satisfy the requirements.
Purchases from a single supplier are restricted to the following categories
The item is only available from a single provider; detail the procedures taken to ensure there are no other vendors.
The Advantages of Sole Sourcing
Improved negotiations and payment terms
When a firm has one supplier, it may have more negotiating freedom. A single supplier, for example, may give exceptional firm pricing and payment arrangements.
Services and items of higher quality
A single-source supplier may deliver higher-quality products and services to keep a contract with a corporation. This may entice new clients, increasing income.
Many businesses choose single sourcing since it lowers the cost of materials and goods. This method also helps them reduce operating expenses, freeing up funds for other vital company problems.
Enhanced product consistency
When a firm utilizes single sourcing, the supplier may learn about its preferences. This may increase product consistency by guaranteeing that all products look and perform in the same manner and at the same degree of quality.
In the market, you have a competitive edge.
A firm may have a competitive edge over rivals if a supplier regularly provides high-quality resources, commodities, or services. This may persuade clients of competitors to consider the goods of the firm for which you work instead.
More potential for brand collaboration
When a firm and a supplier establish a successful single-sourcing agreement, they may consider brand collaboration efforts. This implies that one firm may promote the other, potentially increasing earnings and consumer bases.
Sole sourcing, a firm picks one supplier since it’s the only accessible alternative for materials, components, commodities, or services that the company requires. A solitary source provider often possesses materials that other suppliers do not have. This might be due to intellectual property, expertise, or design standards.