The Competition in Contracting Act (CICA) governs competition in federal contracting and is designed to guarantee full and open competition amongst competing offerors. Although the federal government generally prefers full and open competition, certain contracts are awarded on a sole-source basis without going through the standard competitive process. Such sole-source contracts may be of particular interest to specialized or small business contractors. The Federal Acquisition Regulation (FAR) provides seven limited exceptions to full and open competition listed in FAR subsections 6.302-1 through 6.302-7. Even if one of these exceptions is applicable, the FAR requires contracting officers to solicit offers from as many potential sources as practicable under the circumstances.

The sole-source exception to full and open competition is provided in FAR 6.302-1 and applies in situations where only one responsible source exists to satisfy agency requirements. Sole-source decisions must be supported with written justifications and approvals. Notably, the government may not issue sole-source awards due to a lack of advance planning or concerns relating to the expiration of appropriated funds. Pursuant to FAR 5.201, contracting officers are also required to publish notifications of sole-source solicitations, giving prospective contractors interested in such procurements an opportunity to respond. FAR 6.302-1 outlines three specific scenarios in which contracting officers are permitted to conduct procurements on a sole-source basis.

As a sovereign and a contracting party, the government holds the prerogative to terminate a government contract, either partially or completely, whenever it is in its best interest. While a contractor may pose certain challenges to the CO’s decision to terminate a contract, it is generally accepted that the government’s rights in this regard are practically limitless. The Federal Acquisition Regulation (FAR) outlines the methods through which the government may settle contracts it terminates for its convenience. Specifically, under FAR § 49.103, the government may settle contracts terminated for convenience through negotiated agreement, CO’s determination, costing-out under vouchers for cost-reimbursable contracts, or through a combination of these methods. Typically, when the government exercises its right to terminate a contract for convenience, it enters into a settlement agreement with the prime contractor. In turn, prime contractors are required to settle any subcontractor termination settlement proposals.

Once the government issues a notice terminating a contract for convenience, the prime contractor must terminate all subcontracts related to the terminated portion of the prime contract. Under FAR § 49.104, prime contractors are required to settle all outstanding liabilities that arise out of the termination of subcontracts and promptly notify the CO of any legal proceedings that may be instituted by a subcontractor. Additionally, FAR § 49.108 generally outlines the parties’ rights, obligations, and procedures pertaining to subcontractor settlement proposals. Notably, FAR § 49.108-2(b) makes it abundantly clear that the government’s rights to terminate the contract for convenience are unaffected by a prime contractor’s failure to include an appropriate termination clause in a subcontract. Therefore, contractors should review the termination clause of their subcontract agreements to ensure their rights are adequately protected in case of a termination for the government’s convenience.

The Defense Acquisition Regulation Supplement (DFARS) 215.408(5) requires contracting officers (CO) to insert the provision at DFARS 252.215-7010 when reasonably certain that the submission of certified cost or pricing data or data other than the certified cost or pricing data is required, or in procurements where there is only one offer and the provision at DFARS 252.215-7008 is utilized. This requirement to include the provision at DFARS 252.215-7010 applies to FAR part 12 procurements for the acquisition of commercial products and services but not to contracts below the Simplified Acquisition Threshold (SAT) or Commercial Off the Shelf (COTS) items. DFARS 252.215-7010(b) lists the exceptions to providing certified cost or pricing data in major weapon systems procurements, including their components, subsystems, or spare parts. Specifically, under DFARS 252.215-7010(b)(1), defense contractors are excepted from providing certified cost or pricing data in such procurements if they can provide information demonstrating that the prices at issue are set by law or regulation or alternatively, prove the commerciality of the product that is a component, subsystem, or a spare part of a major weapon system. Additionally, to be granted an exception from the requirement to submit certified cost or pricing data in such procurements, defense contractors must also demonstrate that their offered prices are fair and reasonable.

*** REGULATORY UPDATE: On November 12, 2024, the General Services Administration, Department of Defense, and National Aeronautics and Space Administration issued an interim rule, which went into effect the same day. The interim rule amended the Federal Acquisition Regulation to clarify System of Award Management (SAM) pre-award registration requirements. The rule revises the solicitation provision at FAR 52.204-7 to clarify that while an offeror must be registered in SAM at the time of offer submission and at the time of contract award, the offeror need not be registered in SAM at every moment in between those two points. Accordingly, parts of the Government Accountability Office and the Court of Federal Claims decisions, including the decision referenced in this article, that levy a requirement for offerors to maintain a continuous, uninterrupted, SAM registration during the entirety of the pre-award process are no longer applicable.***

To be eligible for federal contract awards, contractors are required to register and maintain their System for Award Management (SAM) registration within the integrated award environment (IAE) managed by the General Services Administration (GSA) Federal Acquisition Service (FAS). The Federal Acquisition Regulation (FAR) requires federal contractors to initially register in SAM before they receive an award and annually renew their registration thereafter. Additionally, FAR § 4.1105 instructs contracting officers (CO) to insert the provision at FAR 52.204-7 in all solicitations except where certain limited exceptions apply. The provision at FAR 52.204-7 provides in pertinent part that “an offeror is required to be registered in SAM when submitting an offer or quotation, and shall continue to be registered until time of award, during performance, and through final payment of any contract, basic agreement, basic ordering agreement, or blanket purchasing agreement resulting from this solicitation.” Occasionally, a situation may arise where a prospective contractor’s SAM registration lapses between the time it submits a proposal and when it receives a contract award in violation of the provision at FAR 52.204-7. In such situations, the resulting award may be protested for violating the terms of the solicitation, provided the solicitation contains the provision at FAR 52.204-7.