How to Navigate Non-Competitive Procurements Like a Pro
Sometimes, selling to local governments means meeting an immediate, bespoke need:
A small town heading into hurricane season with no emergency alert system to ping devices in a geo-fenced area.
A city that’s found a bespoke technological solution with no peer on the market.
A state agency in dire need of masks, testing kits, or contact tracing systems to mitigate a health crisis.
All of these are examples where competitive procurements are not feasible.
Whether the buyer is actively experiencing an emergency or seeking a solution so unique that only one vendor is at the negotiation table, it’s a waste of time, money and trust to follow the steps of a traditional, competitive procurement.
What is non-competitive procurement?
Non-competitive, or “sole source,” procurements are when contracts are entered into without competition. Sole source procurements are rarer than traditional, competitive contracting, which typically involves an invitation for bids or request for proposals.
There are many reasons why a government entity may want or need to enter into a sole source procurement, as evidenced by the examples above.
But according to the National Association of State Procurement Officers’ annual survey, information technology is one of the top three types of contracts finalized through sole source procurement.
This makes sense. The tech market is so innovative and fast-moving that unique products and solutions are the norm. Public sector technological solutions are evolving at the speed of the market, not government regulations. That places civtech vendors and their potential government buyers in an opportunistic yet sensitive position.
The Pros and Cons of Sole Source Procurement
Even in the context of govtech, sole source procurement is going to be a sensitive topic.
Any non-competitive procurement requires a government buyer, and the procurement official they are consulting with, to forgo competition, which is antithetical to the entire field of public sector procurement.
Competition is built into the regulatory structure, so sole source procurements can feel like the wild west of purchasing: lawless and unpredictable. But that’s where sole source policies come into play.
A government’s approach to non-competitive procurements is likely as unique as the people writing the policies. In recent years, many governments have adopted contracting policies that attempt to challenge the stereotype of public procurement: lengthy, arduous, and slow.
They argue sole source procurement makes for more effective government overall, empowering flexible project design and management and delivering results to residents in a timely manner.
That doesn’t necessarily translate to more non-competitive contracting. However, a procurement department that praises “results-based,” “responsive,” or “agile” processes is most likely to be comfortable exercising a well-managed non-competitive procurement policy.
The Basics of Sole Source Procurement
If you think you might pursue a non-competitive procurement in the future, you need to prepare now.
As the market has proven again and again, you cannot predict when an emergency or special circumstance will change the rules of the game. The best you can do is learn the ins and outs of sole source procurement and come to the negotiation table appropriately prepared.
If you have no market competition, consider providing evidence to back up your claim.
“Just because you’re unique doesn’t mean you’re the only option.”
Many vendors have learned this the hard way, building a relationship with a government buyer under the assumption that your sale could be a sole source procurement, only to be shut down by an exacting procurement official.
And doing so is completely within their rights. Under most SLED procurement policies, your good or service offering one special feature that is otherwise unavailable on the market is not enough to trigger a sole source procurement.
Procurement officials look at the totality of your offering in comparison to the market, meaning that if you’re providing the same function as a competitor that’s just as compatible with the government’s existing systems, that process needs to be competitive.
The best way to make your case is to do your research and overshare. Procurement officials will likely ask you and your government contact for:
A description of the features that no other competitor can match;
Documentation of research conducted to verify that your goods and services are unmatched;
An analysis of the marketplace of vendors, distributors, resellers, and other potential competitors;
Information on compatibility with existing systems; and
Information on any relevant time constraints.
All this information goes to prove your unique ability to provide the good or service. You can improve your chances by drafting your answers ahead of time and adjusting your copy appropriately for the buyer at hand.
2. Goods and services aren’t the only thing that can stand out.
What’s more unique than the human brain?
Many SLED procurement policies call out contracting with experts as a legitimate reason for a sole source procurement.
If an expert, acting as a consultant or contractor, possesses a rare depth or breadth of knowledge on a subject, that’s a legitimate reason to argue that their contract doesn’t need to be competitive. After all, if their CV and a landscape analysis prove that they are unparalleled in their expertise, it’s unlikely you’d be able to find someone else to do the job as well.
3. Keep in mind - the government may be required to post a public notice of the intention to use sole source procurements.
By definition, non-competitive procurements go against much of what public sector procurement procedure was designed to empower: transparency, non-partisanship and, of course, competition.
Many governments choose to make up for this deficit by treating sole source procurements with even more transparency than competitive ones.
According to the National Association of State Procurement Officials’ annual survey, half of respondents said they always publish public notices when they consider entering into a sole source contract.
Typically, the posting goes public before the contract is signed, giving potential bidders an opportunity to challenge the sole source claim, in some states.
The fact that your sole source claim can be checked not just by potential competitors, but also by members of the general public is even more reason to approach this sensitive process carefully.
4. In some jurisdictions, emergency procurements are only an option when the area is in a state of emergency.
Some jurisdictions allow for non-competitive procurements in situations of “unusual and compelling urgency,” which doesn’t necessarily mean a government has declared a state of emergency.
This could apply when the goods or services are required to start or continue time sensitive legal proceedings or when the particular good or service (maybe of a specific brand or model) is required to continue the functioning of vital infrastructure.
This is particularly applicable in defense contracting, when a timely sale might not necessarily happen during a period of national emergency, but acquisition could be a matter of national security.
However, in the SLED market, it’s much more common for government agencies to strictly define emergencies, typically limiting them to some sort of democratic consensus. In many localities, the mayor, council, or manager must declare a state of emergency for emergency purchasing powers to go into effect.
Keep this in mind if you offer a good or service that is related to public safety, security, or health. Just because you perceive an unusual or compelling urgency doesn’t mean the locality is allowed to act upon it.
5. Even if you meet a specific, unique need of the government buyer, you need to fulfill all of the buyer’s requirements.
This may seem simple, but focusing on the nitty-gritty of sole source procurement can allow vendors to forget the bigger picture: the government needs a good or service that’s going to meet all the requirements, not just the unique ones.
Say you come across an opportunity for a sole source procurement in the wild. You learn that a government agency is looking for an application that uses a technology only your company offers. That should set off alarm bells in your head: sole source opportunity!
However, what if you can’t fulfill the other listed needs with your offering? That means you can’t make good on the contract. That means you’re not actually a candidate for procurement at all, let alone sole source procurement.
The Challenges of Sole Source Procurement
In its annual survey, NASPO found that ALL respondents rely on their Chief Procurement Officer to vet and sign off on any non-competitive procurements.
If you pursue a sole source procurement, you will have a lot more face time with the procurement department than you may be used to.
That could be a growth opportunity; sitting in a room with the experts on contracted government spending provides a wonderful chance to show your stuff and ask relevant questions about the potential buyer’s process.
Of course, that’s only if you’re prepared. If you go into a non-competitive procurement opportunity thinking that the rules and regulations no longer apply to you, you will not be successful and perhaps even risk spoiling a client relationship for life.
Be prepared to rise to the occasion.
You will not get to define the terms of a sole source procurement. But you are able to define how prepared you, your sales team, and your legal team are for the inevitably sensitive conversations they require.
Determine what preparation looks like to you, whether that includes conducting market research, creating template documents with your sole source sales pitch, or reading up on your target client’s procurement policy, and keep an ear to the ground.
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