013-030 Procurement Types: Sole Source

013-030 Procurement Types: Sole Source ITS enabling legislation requires that information technology equipment and services be acquired in a manner that insures the maximum of competition among all manufacturers and suppliers of such equipment and services. Accordingly, ITS promotes full and open competition through the issuance of open specifications, unless valid justification is presented and approved by ITS, and the objective evaluation of vendor proposals to determine the lowest and best offering to meet an agency's or public university’s business requirements. True competition protects the integrity and credibility of purchasing in the public sector and is essential in providing best value and adequate contractual protection for the purchasing entity. Mississippi Public Purchasing Law (Section 31-7-13) specifies that noncompetitive items available only from one source may be exempted from bid requirements (sole-sourced). ITS statute, in Section 25-53-5 (p), permits ITS to utilize provisions in Public Purchasing law or regulations, when applicable. In certain limited situations, with appropriate written documentation and proper approval, information technology acquisitions may be sole-sourced. A Sole Source Certification Request is an agency's or public university’s statement, with accompanying documentation, that there is no competition in the marketplace for the requested product or service. Single source acquisitions awarded without competition are exceptions that can only be certified after thorough marketplace research. ITS applies a strict interpretation of the single source definition and is a strong advocate for conducting a competitive process unless the reasons for not competing are overwhelming and incontrovertible. ITS Sole Source Procedure The ITS Sole Source procedure is designed to allow agencies and public universities to submit requests to ITS instead of to DFA when approval of sole source information technology acquisitions is required per Section 31-7-13 of the Mississippi Code. The ITS Sole Source Procurement Request Form, in conjunction with the Sole Source Certification signed by the agency head or public university CIO, has been designed to collect the necessary justification and certification for an information technology sole source acquisition. A Sole Source Certification Request Form should be completed for all information technology sole source acquisition requests other than those delegated to the agency or institution (See Section 015-010: State Agencies, and Section 015-020: IHLs for specific dollar limits for the delegation of Sole Source approval to Agencies and Institutions of Higher Learning, as applicable). Submit the Sole Source Certification Request to ITS rather than to DFA. It is not necessary to submit duplicate paperwork to the DFA Office of Purchasing, Travel, and Fleet Management (OPTFM) for approval of sole source acquisitions. A copy of the Sole Source Certification Request Form is available in PDF or Word format on the ITS website. Customers may also submit sole source requests via ITS' online procurement request system. All sole source certifications must be signed by the Executive Director of the agency or the CIO of the public university, or that person’s designee. Designees must be identified by the agency or public university through formal written correspondence to the ITS Executive Director. ITS thoroughly reviews Sole Source Certification Requests, determining if competing products and/or services exist. If so, ITS will conduct a competitive procurement. If ITS’ review confirms the sole source, then a Sole Source advertisement will be issued, giving interested parties, like other vendors, an opportunity to identify competing products and/or services. Based upon the results of the Sole Source advertisement, ITS will either certify the request as a sole source or conduct a competitive procurement. A CP-1 Acquisition Approval Document issued by ITS for the amount of the sole source acquisition. Agencies that issue purchase orders through DFA should note that this CP-1 is uploaded by ITS into MAGIC to authorize payment of the sole source purchase. Sole Source Criteria and Required Documentation Sole source acquisitions must meet certain criteria. Per Public Purchasing Law, the following criteria must be met for a procurement to be authorized as sole source: 1. The product or services being purchased must perform a function for which no other product or source of services exists, 2. The purchaser must be able to show specific business objectives that can be met only through the unique product or services, AND 3. The product or services must be available only from the manufacturer and NOT through resellers who could submit competitive pricing for the product or services. The purchasing agency or public university is responsible for documenting its business needs in the sole source request, as well as the ways in which the requested product or services meets those needs. In addition, the purchaser should document why other products or services cannot substantially meet the documented needs. If similar products or services exist in the marketplace, the business case for the unique functionality or characteristics of the sole-sourced item must be compelling for the procurement to be sole-sourced under state statute. The purchasing agency/public university should obtain and submit to ITS a written proposal from the sole source provider. This proposal should clearly document the exact product and services to be provided, timeframes for delivery or service provision, and all associated pricing information, including retail price, discount structure, volume-related tiered pricing structures, ongoing support costs, and price escalation caps. If the purchasing agency/public university prefers, the ITS staff assigned to the sole source request can work with the vendor to obtain this information. In addition to the above documentation from the purchaser, certification from the manufacturer should accompany the Sole Source Certification Request. This documentation supplements the sole source justification but does not replace the purchaser’s documentation of business need. The manufacturer must certify, on company letterhead, the unique features of the product or service within the marketplace and must also certify that the product or service is available only through the manufacturer or from a single specified distributor or reseller. Additionally, acquisitions of IT services must include the following information to be authorized as sole source: 1. An explanation about why the amount to be expended is reasonable, and 2. An explanation regarding the efforts by the purchaser to obtain the best possible price. Per Mississippi Code Annotated Section 27-104-7(2)(o), purchasers requesting sole source approval of services must provide an explanation of why the amount to be expended for the service is reasonable, and an explanation of the efforts to obtain the best possible price for the service. Section 27-104-7 directs the efforts of the Personal Services Contract Review Board and by policy and procedure, ITS follows similar documentation requirements. The following factors do NOT constitute valid criteria for sole source designations: • Quality of the product or services: The competitive process has been established to determine the lowest and best offering. • Price of the product or services: The competitive process has been established to determine the lowest and best offering. • Product that performs in a unique way but does not provide unique functionality: A unique algorithm or patented search process is not a sole source unless there is significant functionality that is only available through the requested product. • Project timetable or other scheduling constraints: The emergency purchase statute was established for situations meeting the statutory definition of "emergency". See 013-060 Emergency Purchases. • Incumbent products or service providers: An award from a competitive process for the acquisition of products or services does not constitute a permanent purchasing mechanism. All products and services are re-evaluated from time to time to determine when a full competition and potential replacement are warranted. For service providers, this competition may include a reasonable learning curve for time required by non-incumbents to become acclimated to the particular customer, product, and/or environment. • Sole source designation by other states: Mississippi's sole source requirements are more stringent than those in many other states. Remember: The law says single source, not best source. Competition is used to determine best source. Benefits of Soliciting Proposals It is always acceptable, and usually preferable, to solicit bids or proposals for an acquisition even if the product or services requested are believed to be unique in the marketplace. The benefits of soliciting proposals for a sole source item include: • The purchaser develops a written statement of requirements against which to evaluate the sole source offering • The vendor submits a written statement of commitments and pricing for both initial and ongoing costs, against which the purchaser can evaluate vendor and product performance and which can be incorporated into a negotiated contract • The solicitation of written proposals increases the potential of reduced price offerings and/or written guarantees against excessive price escalation for a set contract period Agency/Public University Responsibility The purchasing agency/public university is responsible for providing all necessary documentation and justification required to support a sole source acquisition, as described above. If adequate documentation is not provided with the request, ITS staff will work with the requestor’s staff to obtain sufficient information to certify the sole source. Note that ITS must charge an hourly rate for the time required to obtain this additional documentation. The purchasing agency/public university is responsible for making the sole source procurement within the amount and from the vendor specified on the CP-1 Acquisition Approval Document. Delegation of Sole Source Certification State Agencies: For state agencies, approval of all technology purchases with a lifecycle cost of $5,000 or less, including sole source purchases, has been delegated to the agency. The ITS Procurement Limits Policies for Agencies require a minimum of two competitive written bids or proposals for technology purchases with a lifecycle cost over $5,000 but not over the dollar amount established in Section 31-7-13(c). Since, for single source items, the procuring agency will be unable to obtain two written bids, ITS must approve all sole source acquisitions of information technology with a lifecycle cost greater than $5,000. IHLs: Institutions of Higher Learning (IHLs) or public universities have been delegated the authority to certify sole source procurements up to $250,000 lifecycle cost under the ITS Procurement Limits Policies for IHLs using the sole source procedures outlined in this Handbook. For the certification of sole source procurements delegated to the CIOs at public universities, the public university must follow ITS’ Sole Source Procedure, including advertisement of the intent to award as sole source, as outlined in this chapter. Institutions certifying a sole source purchase must ensure the criteria listed above are met and documented in writing by the institution and the vendor prior to certifying a product or service as sole source. Sole source documentation must be reviewed and approved by the IHL's CIO for any sole-source certification above $5,000. The ITS sole source procedure requires that sole sources be advertised in a newspaper of statewide circulation for 2 consecutive weeks prior to award. Additionally, Registers of Objectors and Notifications of Award must be posted, and a post-purchase comparison of the award to the purchase documents must be conducted by the IHL CIO. All sole source documentation should be retained in the public university’s procurement file. Sole source requests above $250,000 lifecycle cost require ITS approval. For purposes of periodic recertification of sole sources, the delegated limit of $250,000 is for each certification period, as opposed to a cumulative total. Other than the delegations outlined above, all sole source technology procurements must be certified by ITS. ITS cannot exempt a sole source request--the ITS Exemption Request and ITS Sole Source Request are mutually exclusive. Refer to 009-001 ITS Procurement Process Flows for additional information, specifically the flow labeled Sole Source Certifications.