Sole source procurement allows government agencies to award construction contracts to a single contractor without competitive bidding. While competition typically delivers the best value for taxpayers, certain circumstances justify sole source awards when only one contractor possesses unique capabilities, time constraints prevent competitive bidding, or emergency conditions threaten public safety.
Understanding when sole source procurement is appropriate—and how to justify it properly—separates contractors who successfully secure these opportunities from those whose justifications get rejected. Over 500+ contractors using ConstructionBids.ai track both competitive and sole source opportunities across 2,000+ government agencies.
This comprehensive guide explains sole source procurement rules, justification requirements, approval thresholds, and best practices for both government agencies and contractors pursuing sole source construction contracts.
What is Sole Source Procurement in Construction
Sole source procurement is a non-competitive acquisition method where a government agency awards a contract to a single contractor without soliciting competitive bids or proposals. The agency directly negotiates with one contractor based on the determination that only that contractor can meet specific requirements.
Sole source procurement differs fundamentally from standard competitive procurement:
| Procurement Method | Selection Process | Competition | Timeline | Justification Required | |-------------------|-------------------|-------------|----------|----------------------| | Competitive Bidding | Multiple sealed bids, lowest responsive bidder wins | Open competition | 30-90 days typical | None | | Competitive Proposals | Multiple proposals evaluated on qualifications and price | Limited competition | 45-120 days typical | None | | Sole Source | Direct negotiation with single vendor | No competition | 10-30 days typical | Extensive written justification |
Government agencies prefer competitive procurement because competition:
- Delivers better pricing through market forces
- Provides broader contractor participation
- Reduces favoritism and corruption risk
- Satisfies transparency and accountability requirements
However, rigid adherence to competition requirements creates problems when circumstances demand speed, unique expertise, or continuation with existing contractors.
:::key-takeaway Sole source procurement accounts for only 3-8% of government construction contracts by value, but these contracts often address the most critical, time-sensitive, or technically complex projects. :::
Sole Source vs. Single Source Procurement
The terms "sole source" and "single source" are often confused but have distinct meanings:
Sole Source: Only ONE contractor can meet the requirement due to unique capabilities, proprietary systems, or exclusive rights. Competition is impossible regardless of time available.
Single Source: Multiple contractors COULD meet the requirement, but the agency chooses to procure from one contractor for convenience, standardization, or relationship continuity. Competition is possible but deemed impractical.
Example distinctions:
- Sole Source: Expanding a wastewater treatment plant using proprietary technology where only the original equipment manufacturer can provide compatible additions
- Single Source: Continuing with the same roofing contractor for building #4 after they successfully completed buildings #1-3 using the same membrane system
Most procurement regulations treat both categories under "non-competitive procurement" rules, but sole source justifications based on true uniqueness receive more favorable review than single source justifications based on convenience.
When Sole Source Procurement is Appropriate
Procurement regulations establish specific circumstances that justify sole source awards. The burden rests with the government agency (or contractor requesting sole source treatment) to document that at least one justification applies.
1. Only One Responsible Source (True Sole Source)
The most defensible sole source justification: only one contractor possesses the unique capabilities, experience, facilities, or proprietary rights necessary to perform the work.
Qualifying scenarios:
- Proprietary systems: Additions or modifications to facilities using proprietary technology where only the original manufacturer or their authorized contractor can provide compatible work
- Unique expertise: Highly specialized construction requiring capabilities possessed by only one contractor (e.g., underwater nuclear facility construction, specialized clean rooms)
- Exclusive rights: Work on facilities where security clearances, access agreements, or contractual restrictions limit work to a single contractor
- Intellectual property: Projects requiring use of patented methods, copyrighted designs, or trade secrets held by one contractor
Example: A municipality contracts for expansion of an existing water filtration plant using Parkson Corporation's proprietary DynaSand continuous upflow filters. Only Parkson and their certified contractors can design and install additions compatible with the existing system. This qualifies as true sole source because no alternative contractor can provide compatible equipment.
Documentation required: Technical analysis demonstrating that alternative contractors or systems cannot meet functional requirements, along with market research confirming no competitors exist.
2. Emergency or Urgent Need
When urgent circumstances threaten public health, safety, or welfare, normal competitive timelines become impractical. Emergency procurement rules allow sole source awards to address immediate threats.
Qualifying emergencies:
- Natural disasters: Earthquake, flood, hurricane, or wildfire damage requiring immediate structural stabilization
- Infrastructure failures: Bridge collapse, dam failure, or utility system catastrophic failure
- Public health threats: Contaminated water supply, hazardous material release, or facility condition endangering occupants
- National security: Threats to critical infrastructure or defense facilities
Time constraints: Emergency procurement is justified only when the time required for competitive procurement would increase risk to unacceptable levels. If the situation allows 30-45 days for abbreviated competition, emergency sole source justification fails.
Example: A severe winter storm damages the roof of a county jail housing 450 inmates. Immediate repair is required to prevent further water intrusion that threatens electrical systems and creates unsafe conditions. The county awards an emergency sole source contract to a contractor with crews available immediately, rather than waiting 30 days for competitive bidding.
Documentation required: Written determination describing the emergency, risk to public safety if delayed, and explanation of why competitive timeline is impractical. Emergency authority typically requires senior official approval (city manager, agency head, board chair).
:::key-takeaway Emergency sole source authority addresses immediate response only. Permanent repairs typically revert to competitive procurement once the emergency situation is stabilized. :::
3. Cost or Time Savings Through Non-Competition
Some situations allow sole source procurement when competition would increase costs or delay critical projects, even absent true emergency conditions.
Qualifying scenarios:
- Mobilization economies: Contractor already mobilized on-site for related work can add additional scope more economically than new contractor mobilization
- System compatibility: Continuing with the same contractor ensures design consistency and warranty continuity across project phases
- Schedule criticality: Project delays create costs (facility downtime, lost revenue, contract penalties) that exceed potential savings from competition
- Market conditions: Single contractor available with capacity to meet required schedule
Example: A university completes Phase 1 of a multi-building dormitory complex with Contractor A. Phase 2 begins 60 days later. The university determines that bringing in a new contractor requires re-establishing site logistics, duplicating safety training, and risks material/finish mismatches. Cost analysis shows sole source continuation with Contractor A saves $180,000 compared to new contractor mobilization.
Documentation required: Cost-benefit analysis comparing sole source approach with competitive procurement, considering both direct costs and indirect impacts (delay, compatibility, quality risk).
Scrutiny level: This justification receives the highest scrutiny because it relies on convenience rather than absolute necessity. Agencies must demonstrate tangible, quantifiable benefits that exceed the value potentially lost through non-competition.
4. Unsolicited Proposal with Unique Approach
Occasionally contractors propose innovative approaches to agency challenges that offer unique value not available through standard procurement. Agencies may award sole source contracts when proposals demonstrate true innovation.
Qualifying criteria:
- Originality: Approach is genuinely innovative and not available from other contractors
- Independent development: Contractor developed the approach without agency assistance or direction
- Unique benefits: Proposal delivers measurably superior results compared to conventional approaches
- Proprietary elements: Methodology involves proprietary processes or intellectual property
Example: A contractor approaches a transit agency with a proposal to rehabilitate subway tunnel walls using a proprietary polymer coating system that extends service life by 50 years while allowing work during normal operating hours (avoiding costly service shutdowns). The system is patented and no competitors offer equivalent technology. The agency awards a sole source contract after verifying the technology's performance and confirming no competitors exist.
Documentation required: Technical evaluation of the unsolicited proposal, market research confirming uniqueness, and cost-benefit analysis demonstrating value exceeds what competitive procurement would deliver.
Agency policies: Many agencies discourage unsolicited proposals to prevent favoritism. Contractors pursuing this path should verify agency receptiveness before investing in proposal development.
5. Federal Acquisition Streamlining Act (FASA) Exceptions
Federal procurement includes additional sole source justifications under the Federal Acquisition Streamlining Act:
- International agreements: Treaty obligations or international agreements requiring specific contractors
- Public interest: Statutory authorization specifically naming a contractor or authorizing sole source for particular programs
- National security: Defense or intelligence requirements where competition threatens security
- Industrial mobilization: Maintaining industrial base capabilities for national defense purposes
These justifications rarely apply to typical construction projects but become relevant for defense facilities, international projects, or congressionally-directed programs.
Sole Source Justification Requirements
Sole source procurement requires written justification approved by officials at levels corresponding to contract value. Justification quality determines whether approvals are granted and whether the procurement withstands subsequent audit scrutiny.
Core Elements of Sole Source Justification
Every sole source justification must address seven core elements, regardless of jurisdiction or contract value:
1. Description of Need: Detailed explanation of what the agency requires, why it's required, and when it's required. Generic descriptions (e.g., "facility repairs") fail scrutiny. Effective descriptions identify specific functional requirements, performance criteria, and delivery timeline.
2. Basis for Sole Source: Identification of which regulatory exception applies (only one responsible source, emergency, unsolicited proposal, etc.) with factual support explaining why the specific exception is met.
3. Contractor Identification: Complete identification of the sole source contractor, including legal name, address, DUNS/UEI number, and business classifications (size, ownership, certifications).
4. Market Research: Documentation of efforts to identify alternative sources, including databases searched, industry contacts made, and results. Market research must demonstrate good-faith effort to identify competitors, not perfunctory checkbox compliance.
5. Technical Capability: Explanation of why the identified contractor possesses unique capabilities to meet requirements, including relevant experience, specialized equipment, proprietary technology, or exclusive rights.
6. Cost Reasonableness: Analysis demonstrating that the proposed sole source price is fair and reasonable despite absence of competition. Methods include comparison to historical prices, independent cost estimates, or cost/pricing data analysis.
7. Required Approvals: Signatures of officials at levels specified in procurement regulations, with approval authority corresponding to contract value.
:::key-takeaway Sole source justifications that survive audit challenges average 4-8 pages of detailed technical and business analysis, not brief memoranda with conclusory statements. :::
Sole Source Justification Template
This template addresses all required elements for construction sole source justifications:
SOLE SOURCE PROCUREMENT JUSTIFICATION
[Agency Name]
[Date]
1. CONTRACTING INFORMATION
Project Name: _________________________________
Project Number: _________________________________
Estimated Contract Value: $_________________________________
Procurement Method: ☐ Sole Source ☐ Emergency
Anticipated Award Date: _________________________________
2. DESCRIPTION OF REQUIREMENT
2.1 Project Overview
[Detailed description of the construction work required, including:
- Facility location and description
- Scope of work (new construction, renovation, repair, etc.)
- Technical requirements and performance specifications
- Critical schedule requirements and consequences of delay]
2.2 Background
[Context explaining why this requirement exists, including:
- History of the facility or system
- Previous related projects
- Strategic importance to agency mission
- Regulatory or operational drivers]
3. JUSTIFICATION FOR SOLE SOURCE PROCUREMENT
3.1 Regulatory Basis
This procurement is justified under [cite specific regulation]:
☐ FAR 6.302-1: Only one responsible source (FAR 6.302-1)
☐ FAR 6.302-2: Unusual and compelling urgency (FAR 6.302-2)
☐ FAR 6.302-4: International agreement
☐ Other: [specify state/local regulation]
3.2 Specific Justification
[Detailed explanation of why the cited exception applies, including:
- Technical factors making this contractor unique
- Time factors preventing competitive procurement
- Cost factors justifying non-competitive approach
- Risk factors addressed by sole source selection]
3.3 Why Competition is Not Practical
[Explicit statement of why competitive procurement cannot be used:
- Time required for competition vs. time available
- Technical limitations of alternative contractors
- Compatibility requirements with existing systems
- Proprietary technology or intellectual property constraints]
4. MARKET RESEARCH
4.1 Research Methods
The following market research was conducted to identify potential sources:
☐ SAM.gov database search (keywords: _____________)
☐ Industry association directory review: _____________
☐ Published sources of information: _____________
☐ Direct outreach to known contractors: _____________
☐ Technical conference attendance: _____________
☐ Requests for Information (RFI): _____________
4.2 Research Results
[Summary of market research findings, including:
- Number of potential contractors identified: _____
- Contractors contacted and their responses
- Technical limitations of alternative contractors
- Conclusion that only one source meets requirements]
Contractors Identified:
Contractor Name Capability Assessment Can Meet Requirement?
--------------- --------------------- -------------------
[Name] [Brief assessment] ☐ Yes ☐ No
4.3 Unique Capabilities of Selected Contractor
[Detailed explanation of selected contractor's unique qualifications:
- Proprietary technology or intellectual property
- Specialized equipment or facilities
- Unique experience or past performance
- Exclusive rights or agreements
- Security clearances or facility access rights]
5. SELECTED CONTRACTOR INFORMATION
Legal Name: _________________________________
Address: _________________________________
UEI Number: _________________________________
CAGE Code: _________________________________
Business Classifications:
☐ Small Business
☐ Woman-Owned Small Business
☐ Veteran-Owned Small Business
☐ Service-Disabled Veteran-Owned Small Business
☐ HUBZone Small Business
☐ 8(a) Business
☐ Large Business
Key Personnel:
Project Manager: _________________________________
Technical Lead: _________________________________
Contract Point of Contact: _________________________________
6. PAST PERFORMANCE
6.1 Relevant Experience
[List of contractor's relevant past projects demonstrating capability:
Project Name Owner Date Value
------------ ----- ---- -----
[Project] [Agency] [Date] [Value]
Brief description of relevance to current requirement]
6.2 Performance History
[Summary of contractor's performance on relevant past projects:
- Quality of work
- Schedule performance
- Cost control
- Safety record
- Client satisfaction]
7. COST ANALYSIS AND PRICE REASONABLENESS
7.1 Proposed Contract Value
Contractor's Proposed Price: $_________________________________
Basis of Pricing:
☐ Lump sum
☐ Unit prices
☐ Cost-plus-fixed-fee
☐ Cost-plus-award-fee
☐ Time and materials
7.2 Price Reasonableness Determination
[Analysis demonstrating price reasonableness through one or more methods:
Method Used:
☐ Comparison to independent cost estimate: $_________ (difference: ___%)
☐ Comparison to historical prices for similar work: $_________
☐ Comparison to published price lists or market rates
☐ Cost and pricing data analysis (for contracts >threshold)
☐ Value analysis (cost vs. benefit)
Conclusion: The proposed price is ☐ fair and reasonable ☐ requires negotiation
Justification: [Explanation of price reasonableness conclusion]]
7.3 Cost Comparison to Competition (if applicable)
[If agency has basis for comparison, provide analysis:
Estimated cost if competitively bid: $_________
Proposed sole source cost: $_________
Difference: $_________ (_____%)
Justification for premium (if applicable): [Explain value received]]
8. IMPACT OF NOT USING SOLE SOURCE PROCUREMENT
8.1 Consequences of Competitive Procurement
[Analysis of what happens if normal competitive procurement is used:
- Additional time required: _____ days/weeks
- Cost impact of delay: $_________
- Operational impact: [describe]
- Safety or compliance risks: [describe]
- Project delivery risks: [describe]]
8.2 Risk Mitigation Through Sole Source
[Explanation of how sole source approach mitigates identified risks]
9. CONTRACT ADMINISTRATION
9.1 Contract Type
Proposed Contract Type: _________________________________
Rationale: _________________________________
9.2 Period of Performance
Start Date: _________________________________
Completion Date: _________________________________
Total Duration: _____ days/months
9.3 Key Milestones
[List of major project milestones with target dates]
9.4 Performance Monitoring
[Description of how contract performance will be monitored:
- Inspection protocols
- Progress reporting requirements
- Quality assurance procedures
- Payment schedule and verification]
10. REQUIRED APPROVALS
10.1 Certifications
I certify that:
- This justification accurately represents the facts and circumstances
- Market research was conducted to identify alternative sources
- The proposed price is fair and reasonable
- Sole source procurement is in the best interest of [Agency]
- This procurement complies with applicable regulations
10.2 Approval Signatures
Prepared by:
_________________________________ Date: __________
[Name, Title]
[Department]
Technical Review:
_________________________________ Date: __________
[Name, Title]
[Technical Subject Matter Expert]
Budget Review:
_________________________________ Date: __________
[Name, Title]
[Finance Officer]
Legal Review (if required):
_________________________________ Date: __________
[Name, Title]
[Legal Counsel]
Approved by:
_________________________________ Date: __________
[Name, Title - Approval Authority]
[Required level per procurement thresholds]
11. ATTACHMENTS
☐ Independent Cost Estimate
☐ Market Research Documentation
☐ Technical Specifications
☐ Contractor Proposal
☐ Past Performance References
☐ Proprietary Technology Documentation
☐ Emergency Declaration (if applicable)
☐ Cost/Price Analysis Worksheet
☐ [Other relevant documentation]
Market Research Documentation Standards
Market research quality determines justification credibility. Effective market research demonstrates good-faith effort to identify alternatives, not perfunctory compliance.
Inadequate market research (frequently rejected):
- "A Google search was conducted and no alternatives were found"
- "We are not aware of other contractors with these capabilities"
- "Past experience shows this contractor is the best choice"
Adequate market research (defensible in audits):
- SAM.gov search using multiple relevant NAICS codes and keyword combinations, with search results documented
- Outreach to at least 3-5 potentially qualified contractors with written requests for capability statements
- Review of industry association directories and technical publications
- Documentation of responses received (or non-responses) with technical evaluation
- Clear conclusion explaining why each alternative source does not meet requirements
For high-value contracts, consider issuing a formal Request for Information (RFI) or Sources Sought notice to create public record of market research effort.
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Federal Sole Source Procurement Rules
Federal construction sole source procurement follows Federal Acquisition Regulation (FAR) Part 6 rules, with additional requirements in the Defense Federal Acquisition Regulation Supplement (DFARS) for Department of Defense projects.
FAR Part 6: Competition Requirements
FAR 6.302 identifies seven exceptions to competitive requirements. Two apply most frequently to construction:
FAR 6.302-1: Only One Responsible Source Applicable when only one contractor can meet the requirement due to unique capabilities, proprietary technology, or exclusive rights. This exception requires:
- Written justification signed by appropriate official
- Market research documenting search for alternatives
- Notice to alternative sources explaining why they don't qualify (for contracts >$700,000)
FAR 6.302-2: Unusual and Compelling Urgency Applicable when delays from competition would cause serious harm to government or public. This exception requires:
- Clear demonstration of urgent need
- Explanation of why urgency prevents competition
- Evidence that need was not created by lack of advance planning
- Senior-level approval (contracting officer alone cannot approve)
Federal Sole Source Approval Thresholds
Approval authority corresponds to contract value:
| Contract Value | Approval Authority | Justification Posting | |---------------|-------------------|---------------------| | Under $750,000 | Contracting Officer | Not required | | $750,000 - $15,000,000 | Competition Advocate (agency-level) | Required on SAM.gov within 14 days | | $15,000,000 - $100,000,000 | Senior Procurement Executive or Head of Contracting Activity | Required on SAM.gov within 14 days | | Over $100,000,000 | Senior Procurement Executive | Required on SAM.gov within 14 days + Congressional notification |
Public disclosure: For contracts exceeding $750,000, the justification must be posted on SAM.gov within 14 days of award, with limited exceptions for national security.
Simplified Acquisition Procedures (SAP)
Federal purchases under the Simplified Acquisition Threshold (SAT)—currently $250,000 for most construction—receive streamlined treatment:
- Competition preferred but not mandatory
- Simplified sole source justification acceptable
- Contracting officer approval sufficient (no higher-level review)
- No public posting requirement
However, even below SAT, contracting officers must document why competition was not sought and verify price reasonableness.
Architect-Engineer (A-E) Selection
FAR Part 36.6 establishes qualification-based selection (QBS) for architect-engineer services. A-E selection is NOT considered "sole source" even when negotiating with a single firm, because QBS methodology itself satisfies competition requirements through qualification-based down-selection.
Construction contracts remain subject to competitive requirements unless a FAR 6.302 exception applies.
:::key-takeaway Federal sole source justifications exceeding $15 million require Senior Procurement Executive approval and typically take 45-90 days for review and authorization, limiting emergency use at high contract values. :::
State and Local Sole Source Procurement Rules
State and local government sole source rules vary significantly by jurisdiction. Most states model rules on federal FAR principles but apply different thresholds and approval requirements.
Common State Sole Source Frameworks
Most state procurement codes authorize sole source procurement under circumstances similar to federal rules:
Emergency procurement: Imminent threat to public health, safety, or welfare Sole source availability: Only one contractor can meet requirements Compatibility requirements: Additions to existing proprietary systems Specific authority: Legislative or regulatory authorization naming a specific contractor
State-specific variations include:
- Thresholds: Values triggering formal justification and approval requirements ($50,000-$250,000 typical)
- Approval authority: Whether procurement office, agency head, or board/council approval is required
- Public notice: Whether advance notice or post-award disclosure is required
- Protest rights: Whether bidders can protest sole source awards and challenge justifications
State Sole Source Approval Threshold Examples
These examples illustrate typical state thresholds (verify current regulations in your jurisdiction):
| State | Formal Justification Required Above | Governing Body Approval Required Above | Public Posting Required | |-------|-----------------------------------|---------------------------------------|----------------------| | California | $5,000 | $100,000 (board approval) | Yes, for contracts >$100,000 | | Texas | $50,000 | $100,000 (competitive proposal waiver) | Yes, for contracts >$50,000 | | Florida | $75,000 | Varies by agency | Yes, for contracts >$75,000 | | New York | $50,000 | $100,000 (state board) | Yes, all sole source awards | | Washington | $10,000 | $150,000 (higher authority) | Yes, for contracts >$10,000 | | Illinois | $30,000 | $100,000 (chief procurement officer) | Yes, all sole source awards |
Verification required: These thresholds change periodically through legislation or regulation updates. Always verify current requirements with the specific agency's procurement office.
Municipal Sole Source Procurement
City and county procurement rules layer additional requirements onto state rules:
Charter provisions: Many cities operate under charter rules that establish procurement requirements more restrictive than state minimums
Ordinance requirements: Local ordinances may require city council approval for sole source awards above specific thresholds
Local preference policies: Some jurisdictions require preference for local contractors, complicating sole source justifications based on distant contractors' unique capabilities
Public transparency: Municipal governments face heightened public scrutiny of sole source awards, requiring robust documentation to withstand political challenges
Example: A city operating under state rules allowing sole source awards up to $100,000 without formal justification may have a city charter requiring detailed justification and council approval for all sole source contracts exceeding $25,000.
Cooperative Purchasing and Sole Source
Many states participate in cooperative purchasing programs (e.g., NASPO ValuePoint, Sourcewell, State of Texas DIR contracts) that establish pre-competed contracts available to multiple agencies.
When a contractor holds a cooperative contract:
- Individual agencies can "piggyback" on the competitively awarded master contract
- No separate competitive procurement required
- Not technically "sole source" because the master contract was competitively awarded
- Agency must verify scope of work falls within master contract terms
Cooperative contracts provide a mechanism to achieve sole source-like speed and convenience while satisfying competition requirements through the master procurement.
For comprehensive guidance on government construction procurement, see our Government Construction Bids Guide.
Emergency Procurement Authority and Procedures
Emergency procurement provides the most time-sensitive form of sole source authority when immediate action is required to protect public health, safety, or welfare.
What Qualifies as a Construction Emergency
Emergency procurement authority applies only when three conditions exist:
1. Imminent Threat: Present danger to public health, safety, welfare, or critical infrastructure—not merely inconvenience or future risk
2. Urgent Timeline: Normal competitive procurement timeline would create unacceptable risk or damage
3. Unforeseen Nature: Emergency resulted from circumstances not reasonably foreseeable or preventable through normal planning
Qualifying emergency scenarios:
- Structural failure threatening building collapse
- Utility system failure affecting essential services
- Natural disaster damage requiring immediate stabilization
- Hazardous material release requiring emergency containment
- Critical infrastructure failure with cascading consequences
Non-qualifying scenarios (despite agency urgency):
- Deferred maintenance creating predictable problems
- Budget cycles creating artificial urgency
- Contractor default requiring completion of work
- Design errors discovered during construction
- Management failures creating schedule pressures
Courts and auditors scrutinize emergency procurements intensely because the absence of competition creates corruption risk. Agencies must document both the emergency nature and the reason normal procurement is impractical.
Emergency Procurement Authorization Levels
Emergency procurement authority typically requires senior-level approval:
Federal emergencies:
- Contracting Officer authority limited to $750,000 (FAR 18.201)
- Higher authority required for larger emergencies
- Major disaster declarations (Stafford Act) provide broader emergency authority
State/local emergencies:
- City Manager or County Administrator: typically $50,000-$250,000
- Governing Board (city council, county commission): $250,000-$1,000,000
- Emergency declaration by Mayor or Governor: higher limits or no limits during declared emergencies
Emergency authority expires when the immediate threat is resolved. Long-term repairs revert to standard competitive procurement.
Emergency Sole Source Justification Requirements
Emergency procurements require written justification addressing five elements:
1. Nature of Emergency Detailed description of the threat to public health, safety, or critical operations:
- What specific harm will occur?
- What is the magnitude of impact?
- What is the timeline for harm?
2. Cause of Emergency Explanation of circumstances creating the emergency:
- Natural disaster, infrastructure failure, or other event
- When the emergency became known
- Why the situation could not be anticipated or prevented
3. Why Competition is Impractical Specific explanation of why competitive timeline creates unacceptable risk:
- Time required for competitive procurement: _____ days
- Time available before unacceptable harm: _____ days
- Gap between timelines and consequence of delay
4. Contractor Selection Rationale Explanation of why the selected contractor was chosen:
- Availability to respond immediately
- Proximity to emergency site
- Specialized capabilities for emergency response
- Equipment or resources immediately available
- Past performance on similar emergency response
5. Scope and Duration Limitation Clear statement that emergency authority covers only immediate response:
- Specific scope limited to threat stabilization
- Not permanent repair or improvement
- Duration limited to emergency resolution
- Follow-on work to be competitively procured
Example emergency justification:
EMERGENCY PROCUREMENT JUSTIFICATION
Date: February 16, 2026
Project: Emergency Roof Stabilization - City Hall
Estimated Value: $85,000
EMERGENCY DECLARATION:
On February 15, 2026, at 2:30 PM, a severe windstorm damaged the City Hall roof,
displacing approximately 40% of the roof membrane and exposing the interior to weather.
The National Weather Service forecasts heavy rain within 48 hours. Without immediate
action, rainwater infiltration will damage electrical systems, destroy records in
multiple departments, and render the building unsafe for occupancy.
COMPETITIVE PROCUREMENT IMPRACTICAL:
Normal competitive bidding requires 21-30 days under city procurement rules.
Heavy rain forecast in 48 hours makes delay unacceptable. The immediate threat
requires emergency action.
CONTRACTOR SELECTION:
ABC Roofing, Inc. was selected based on:
- Immediate availability (crews available within 6 hours)
- Local presence (15 minutes from site)
- Equipment immediately available (trucks, materials on hand)
- Past performance (completed similar emergency repairs for Parks Department in 2024)
- Licensing and insurance current and verified
SCOPE LIMITATION:
This emergency authorization covers ONLY:
- Weather-tight tarping and protection of exposed areas
- Securing loose materials to prevent further damage
- Emergency structural stabilization if required
Permanent roof replacement will be competitively procured after immediate threat
is resolved.
PRICE REASONABLENESS:
Price quote of $85,000 compared to recent similar emergency work performed for
other jurisdictions ($78,000-$92,000 range). Price is fair and reasonable given
emergency circumstances.
Approved:
_____________________________ Date: __________
John Smith, City Manager
Emergency Contract Duration and Extensions
Emergency contracts should address only immediate needs, typically 30-90 days maximum. Longer duration requires justification explaining why permanent solution cannot be competitively procured during that timeframe.
If emergency work uncovers additional damage or complexity:
- Document the discovery and circumstances
- Obtain approval for emergency contract modification
- Explain why extending emergency work is more prudent than stopping work to competitively bid additional scope
Avoid pattern of converting emergency contracts into long-term arrangements through successive amendments. This practice attracts audit scrutiny and legal challenges.
Sole Source Price Negotiation and Cost Analysis
Absence of competition eliminates natural price discipline. Agencies must verify sole source pricing is fair and reasonable through independent cost analysis.
Methods for Determining Price Reasonableness
FAR 15.404-1 establishes acceptable methods for determining price reasonableness without competition:
1. Comparison to Independent Cost Estimate (ICE) Agency develops its own detailed cost estimate based on industry pricing data, then compares contractor's proposal to the ICE. Variances exceeding 10-15% require explanation and negotiation.
2. Comparison to Historical Pricing Compare proposed pricing to:
- Previous contracts with same contractor for similar work
- Other contractors' pricing on similar projects
- Published unit cost databases (RS Means, regional cost indices)
Adjust for time (inflation), location, and project-specific factors before comparison.
3. Certified Cost or Pricing Data Analysis For federal contracts exceeding $2 million (Truth in Negotiations Act threshold), contractors must submit certified cost or pricing data providing visibility into actual costs, overhead rates, and profit margins.
Agency analyzes cost buildup to verify:
- Labor rates match contractor's actual payroll
- Material costs match supplier invoices or quotes
- Equipment rates align with industry standards
- Overhead and profit margins are reasonable (typically 10-15% combined for construction)
4. Value Analysis When direct price comparison isn't available, analyze value delivered:
- Cost per functional unit (cost per square foot, per linear foot, per each)
- Life-cycle cost analysis (initial cost vs. long-term performance)
- Risk reduction value (cost of sole source vs. cost of delay or failure)
Sole Source Negotiation Strategies
Even in sole source situations, agencies should negotiate rather than accept initial pricing:
Request Cost Breakdown Require detailed cost breakdown showing:
- Direct labor hours by classification and hourly rates
- Material quantities, unit costs, and suppliers
- Equipment costs and rental rates
- Subcontractor quotes (at least 3 quotes if subcontracting significant scope)
- Overhead rate and basis
- Profit percentage
Challenge Unsupported Costs Question costs that appear excessive:
- Labor rates exceeding prevailing wage or market rates
- Material markups exceeding 10-15%
- Equipment rates above industry norms
- Overhead rates above contractor's historical rates
- Profit margins exceeding 10-12% (15% maximum)
Propose Alternative Approaches Suggest value engineering or alternative methods that reduce costs while meeting requirements:
- Different materials that meet performance specs
- Alternative construction sequencing
- Owner-furnished materials for long-lead or expensive items
- Phased construction to spread costs
Establish Not-to-Exceed Price If uncertainty exists about final quantities or conditions, negotiate a not-to-exceed price with unit rates for actual quantities. This protects the owner while giving contractor flexibility.
Document Negotiation Results Memorialize negotiation discussions and agreements:
- Points of negotiation and contractor responses
- Cost reductions achieved
- Final agreed pricing with breakdown
- Value engineering incorporated
Documentation demonstrates due diligence to auditors and creates record for future sole source negotiations.
:::key-takeaway Effective sole source price negotiation typically achieves 8-15% cost reduction compared to contractor's initial proposal, even without competitive leverage. :::
Cost-Plus Contract Considerations
Emergency and sole source contracts sometimes use cost-plus pricing (cost-plus-fixed-fee, cost-plus-award-fee, or time-and-materials) when scope uncertainty prevents lump sum pricing.
Cost-plus contracts require enhanced oversight:
Define Allowable Costs Specify what costs are reimbursable and which are included in overhead:
- Direct labor (field personnel)
- Materials and supplies
- Equipment rental or usage
- Subcontractors and suppliers
- Insurance and bonding specific to the project
Establish Fee Structure Negotiate fixed fee or award fee:
- Fixed fee: Contractor receives specified fee regardless of actual costs (incentivizes efficiency)
- Award fee: Fee varies based on performance against objective criteria
- Percentage fee: Generally avoided in government construction (eliminates cost control incentive)
Require Cost Documentation Mandate audit-quality documentation of all costs:
- Timecards for direct labor
- Invoices and receipts for materials
- Equipment logs and rental agreements
- Subcontractor invoices and payment proof
Cap Maximum Price Include not-to-exceed provision limiting owner's total obligation, with over-ceiling costs absorbed by contractor.
Contractor Strategies for Sole Source Opportunities
Contractors pursuing sole source opportunities must understand both agency requirements and positioning strategies that establish unique capabilities.
Building Sole Source Qualifications
Contractors become sole source candidates by developing genuinely unique capabilities:
1. Proprietary Technology or Methods
- Develop patented construction methods or systems
- License exclusive distribution rights for proprietary products
- Create unique expertise in emerging technologies (e.g., 3D concrete printing, advanced composites)
2. Specialized Equipment and Facilities
- Invest in specialized equipment that competitors don't possess
- Develop unique fabrication or testing facilities
- Maintain equipment readiness that enables rapid response
3. Security Clearances and Credentials
- Obtain facility security clearances for defense or secure facilities
- Acquire specialized certifications (nuclear facilities, high-security environments)
- Maintain pre-qualified contractor status on critical facilities
4. Exclusive Relationships
- Establish authorized dealer/contractor agreements with equipment manufacturers
- Develop unique partnerships for complex projects requiring multiple specialties
- Maintain exclusive rights to proprietary materials or products in geographic areas
5. Deep Specialized Experience
- Build track record in highly specialized niches (underwater construction, nuclear facilities, historic restoration)
- Develop subject matter expertise recognized as industry-leading
- Accumulate past performance that demonstrates unique capability
Positioning for Sole Source Selection
Active positioning increases the likelihood of sole source selection when qualifying circumstances arise:
Maintain Agency Relationships
- Attend industry days and agency outreach events
- Provide technical assistance on agency challenges
- Demonstrate thought leadership through presentations and publications
- Build reputation as the go-to expert in your specialty
Document Unique Capabilities
- Maintain capability statements highlighting proprietary systems and unique expertise
- Develop case studies demonstrating successful complex projects
- Create technical white papers explaining your unique approaches
- Obtain third-party validation (certifications, awards, endorsements)
Monitor Agency Needs
- Track agency facility conditions and upcoming needs
- Identify compatibility requirements with existing systems you installed
- Anticipate emergency scenarios where rapid response creates value
- Stay visible so agencies think of you when sole source situations arise
Respond to Sources Sought Notices
- Monitor FedBizOpps (SAM.gov), state procurement portals, and agency websites for Sources Sought notices
- Respond immediately with detailed capability statements
- Use responses to establish your unique qualifications in agency's awareness
Submitting Unsolicited Proposals
Unsolicited proposals allow contractors to propose innovative solutions to agency challenges without waiting for formal solicitations. Success requires understanding agency receptiveness and proposal quality standards.
Pre-Proposal Assessment Before investing in proposal development:
- Verify agency accepts unsolicited proposals (many federal agencies discourage them)
- Identify the specific agency challenge your approach addresses
- Confirm your approach is genuinely unique (not available from competitors)
- Assess whether agency has budget authority for unsolicited procurement
Unsolicited Proposal Content Strong unsolicited proposals include:
-
Executive Summary: Concise statement of the problem, your solution, and unique value (1-2 pages)
-
Problem Statement: Detailed description of the agency challenge, with data supporting that it's a real problem requiring solution
-
Proposed Solution: Technical description of your approach, explaining:
- How it works
- Why it's superior to conventional approaches
- Proprietary elements or intellectual property involved
- Performance benefits and outcomes
-
Unique Qualifications: Documentation that only your firm can provide this solution:
- Patents, proprietary technology, or exclusive rights
- Specialized equipment or facilities
- Unique past performance and expertise
-
Cost and Schedule: Realistic cost estimate and project timeline demonstrating value
-
Supporting Documentation: Case studies, test results, photos, technical specifications, and third-party validations
Submission and Follow-Up
- Submit through official channels (don't bypass procurement office)
- Follow agency-specific unsolicited proposal procedures
- Expect 90-180 days for agency evaluation
- Be prepared for agency to request additional information or modifications
- Accept that agency may decline or choose to competitively bid the concept
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Sole Source Risks and Oversight Requirements
Sole source procurement creates risks for both agencies and contractors. Proper oversight and controls mitigate these risks.
Agency Risks in Sole Source Procurement
Higher Prices: Absence of competition eliminates natural price discipline. Sole source contracts typically cost 10-30% more than competitively awarded contracts for similar work.
Favoritism and Corruption: Sole source authority creates opportunity for improper contractor selection based on relationships rather than qualifications. This risk requires enhanced scrutiny and documentation.
Audit Findings: Inadequate sole source justification or market research leads to audit findings, contract challenges, and potential personal liability for approving officials.
Legal Challenges: Unsuccessful contractors may protest sole source awards, arguing that competition was practical and that sole source justification is pretextual.
Reduced Innovation: Limiting competition to one contractor eliminates the innovative approaches and alternative solutions that other contractors might propose.
Contractor Risks in Sole Source Procurement
Political Scrutiny: Sole source awards attract public and political attention. Contractors must withstand scrutiny of pricing, qualifications, and relationships with agency officials.
Audit Exposure: Sole source contracts receive enhanced audit attention. Cost documentation, labor rates, and profit margins must withstand detailed review.
Protest Challenges: Competitors may protest sole source awards, requiring contractors to defend their unique qualifications and potentially delaying project start.
Performance Pressure: Sole source contractors face heightened performance expectations because agency "went out on a limb" to award without competition. Poor performance damages future sole source opportunities.
Price Negotiation Pressure: Agencies negotiate aggressively on sole source pricing to demonstrate they protected taxpayer interests despite non-competition.
Oversight and Control Measures
Agencies implement controls to mitigate sole source risks:
Independent Cost Estimates (ICE) Require cost estimating staff to develop ICE before receiving contractor proposals. Comparison to ICE validates price reasonableness.
Multi-Level Review Require review and approval by officials outside the requesting department:
- Procurement office review of justification adequacy
- Legal counsel review of regulatory compliance
- Finance office review of budget availability and cost analysis
- Senior executive approval at levels corresponding to contract value
Public Disclosure Post sole source justifications publicly (required for federal contracts >$750,000, recommended for state/local contracts above thresholds). Public transparency discourages favoritism.
Competitive Range Analysis For borderline sole source situations, document why limited competition (soliciting 2-3 qualified contractors) isn't feasible. This demonstrates consideration of alternatives to pure sole source.
Contract Performance Monitoring Enhanced monitoring of sole source contracts:
- More frequent progress inspections
- Detailed cost documentation review for cost-plus contracts
- Third-party quality assurance testing
- Documentation of schedule and budget performance
Post-Award Audit Conduct post-award audits of high-value sole source contracts to verify:
- Final costs align with approved budget
- Cost documentation supports reimbursements
- Performance met specifications
- Process followed approved procedures
Alternatives to Sole Source Procurement
Before committing to sole source procurement, agencies should evaluate alternatives that provide similar benefits while maintaining competition.
Limited Competition Strategies
Two-Step Procurement
- Step 1: Request qualifications from all interested contractors
- Step 2: Invite only qualified contractors (typically 2-5) to submit competitive proposals
- Benefits: Maintains competition among capable contractors while excluding unqualified bidders
Pre-Qualified Contractor Lists
- Maintain pre-qualified lists of contractors with specific capabilities
- Solicit competitive proposals from pre-qualified list when needs arise
- Update lists annually or biannually through qualification process
- Benefits: Faster procurement than open competition while maintaining price competition
Phased Procurement
- Award Phase 1 competitively with explicit option for future phases based on performance
- Exercise options for subsequent phases if Phase 1 performance is satisfactory
- Benefits: Competition for initial work, continuity for follow-on work
Cooperative Purchasing Agreements
Cooperative purchasing contracts (Sourcewell, NASPO ValuePoint, state cooperative programs) provide pre-competed contracts available to multiple agencies:
- Master contract awarded through competitive procurement
- Individual agencies "piggyback" without separate competition
- Pricing established through master contract competition
- Faster than independent procurement while satisfying competition requirements
When cooperative contracts work well:
- Standardized products or services (equipment, commodities)
- Repetitive project types with similar requirements
- Agencies without procurement capacity for complex competitions
Limitations:
- Custom or site-specific construction doesn't fit standard contract terms
- Master contract pricing may not reflect local market conditions
- Geographic limitations (contractor may not serve all locations)
Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts
IDIQ contracts establish pre-competed contractual vehicles for future construction needs:
- Agency competitively awards IDIQ contracts to multiple contractors (typically 3-8)
- Contract establishes pricing methodology (unit prices, hourly rates, or percentages)
- Specific task orders issued competitively among IDIQ contractors
- Benefits: Rapid task order issuance (10-15 days) while maintaining competition
IDIQ contracts work particularly well for:
- Ongoing facility maintenance and repair
- Emergency response (pre-qualified contractors ready to respond)
- Small projects below thresholds justifying standalone procurement
- Geographic areas requiring rapid response (multiple contractors covering different areas)
Job Order Contracting (JOC)
JOC is a specialized IDIQ variant using published unit price books:
- Contractors bid coefficient applied to RS Means or similar unit price book
- Task orders issued by selecting line items from price book
- Coefficient determines markup (e.g., coefficient of 0.95 = 5% discount from book prices)
- Benefits: Extremely rapid pricing (hours instead of days) while maintaining fair pricing based on published standards
JOC works well for:
- High-volume, low-to-moderate complexity repairs and alterations
- Facilities departments with continuous minor construction needs
- Situations requiring rapid project execution
Design-Build Procurement
Design-build procurement combines design and construction in one contract, sometimes avoiding sole source issues:
- Single entity responsible for both design and construction
- Selection based on qualifications and approach (QBS or best-value)
- Competition occurs at conceptual design stage
- Benefits: Integrated delivery, faster schedule, single point of responsibility
Design-build addresses some circumstances that might otherwise require sole source:
- Complex projects requiring specialized integration of design and construction
- Fast-track projects where overlapping design and construction saves time
- Projects requiring proprietary systems (proprietary rights holder can lead design-build team)
Frequently Asked Questions
What is the difference between sole source and single source procurement?
Sole source procurement occurs when only ONE contractor can meet the requirement due to unique capabilities, proprietary technology, or exclusive rights—competition is impossible. Single source procurement occurs when multiple contractors COULD meet the requirement but the agency chooses one contractor for convenience, standardization, or continuity—competition is possible but deemed impractical. Most procurement regulations treat both under "non-competitive procurement" rules, but true sole source justifications (based on unique capability) receive more favorable review than single source justifications based on convenience.
When is sole source procurement allowed in construction?
Sole source procurement is allowed when specific regulatory exceptions apply: (1) Only one responsible source exists with unique capabilities to meet requirements, (2) Unusual and compelling urgency prevents normal competitive timeline, (3) Emergency threatens public health or safety requiring immediate action, (4) Contractor submits unsolicited proposal with unique innovative approach, or (5) International agreement, public interest, or statutory authorization requires specific contractor. The agency bears the burden of documenting that circumstances genuinely meet exception criteria and that competition is impractical.
How do you justify a sole source procurement in construction?
Sole source justification requires written documentation addressing: (1) Detailed description of the construction requirement and why it's needed, (2) Identification of which regulatory exception applies, (3) Market research demonstrating good-faith search for alternative sources, (4) Technical explanation of selected contractor's unique capabilities, (5) Analysis demonstrating proposed price is fair and reasonable despite absence of competition, (6) Explanation of consequences if competitive procurement is used instead, and (7) Approvals by officials at levels corresponding to contract value. Justifications typically require 4-8 pages of detailed analysis with supporting documentation.
What dollar threshold requires sole source justification?
Thresholds vary by jurisdiction. Federal construction: informal justification under $250,000 (simplified acquisition threshold), formal written justification above $250,000, senior-level approval above $750,000, public posting above $750,000. State governments: typically $10,000-$50,000 triggers formal justification requirement, $100,000-$250,000 requires governing body approval. Municipal governments often impose lower thresholds ($5,000-$25,000). Verify specific requirements with the contracting agency's procurement office, as thresholds change through legislation and regulation updates.
Can you negotiate price in sole source procurement?
Yes, and agencies MUST negotiate to establish price reasonableness despite absence of competition. Negotiation techniques include: requesting detailed cost breakdowns showing labor, materials, equipment, overhead, and profit; comparing proposed pricing to independent cost estimates and historical data; challenging costs that exceed market rates or contractor's historical rates; proposing value engineering or alternative approaches; requiring certified cost or pricing data for large contracts; and establishing not-to-exceed prices with unit rates for uncertain quantities. Effective negotiation typically achieves 8-15% cost reduction from contractor's initial proposal.
What is emergency procurement authority in construction?
Emergency procurement authority allows agencies to award sole source contracts immediately when delays from competitive procurement would cause serious harm to public health, safety, or welfare. Qualifying emergencies include natural disaster damage requiring immediate stabilization, critical infrastructure failure threatening essential services, structural failures threatening collapse, or hazardous material releases. Emergency authority requires: senior-level approval, written declaration explaining the emergency and threat, documentation of why competitive timeline is impractical, and scope limitation to immediate response only (permanent repairs revert to competitive procurement after emergency stabilizes).
How long does sole source procurement take compared to competitive bidding?
Competitive construction bidding typically requires 45-90 days (advertisement 15-30 days, bid preparation 30-45 days, evaluation 7-14 days). Sole source procurement can be completed in 10-30 days once justification is approved (negotiation and award 5-15 days). However, sole source justification approval adds time: 7-14 days for contracts under $1M, 30-60 days for contracts $1M-$15M, 45-90 days for contracts over $15M. Total elapsed time for large sole source contracts (including justification approval) often equals or exceeds competitive procurement. Speed advantage exists primarily for smaller contracts and true emergencies.
Do contractors have to compete if the project is sole source?
No. If an agency determines sole source procurement is appropriate and the justification is approved, the contract is awarded directly to the identified contractor without competition. However, contractors must demonstrate they possess the unique capabilities claimed in the sole source justification and must negotiate pricing in good faith. If the contractor's pricing is determined unreasonable or capabilities are misrepresented, the agency may cancel the sole source procurement and issue a competitive solicitation instead. Contractors benefit from sole source awards but bear responsibility for delivering value that justifies the non-competitive approach.
What happens if a sole source justification is challenged?
Sole source justifications can be challenged through bid protests filed by unsuccessful contractors who believe competition should have occurred. The protest process: (1) Protester files protest with agency or third-party forum (GAO for federal, state-level boards for state/local), (2) Agency suspends contract award pending protest resolution, (3) Agency must defend the sole source justification with evidence supporting claimed exception and market research, (4) Protest authority reviews justification and makes determination (sustain or deny protest), (5) If protest is sustained, agency must either competitively procure or strengthen justification. Protest resolution typically takes 60-120 days.
Can a sole source contract be extended or modified?
Yes, but modifications must maintain the original sole source justification's validity. Minor modifications (adjusting quantities within original scope, extending time due to changed conditions) generally don't require new justification. Significant modifications (adding substantially different work, dramatically increasing value, extending duration beyond original justification) require new sole source justification demonstrating the modification circumstances also meet exception criteria. Agencies must avoid converting sole source contracts into long-term arrangements through successive modifications, as this pattern attracts audit scrutiny. If ongoing work is needed, transition to competitive procurement or establish IDIQ contract.
What is the role of market research in sole source justification?
Market research demonstrates the agency made good-faith effort to identify alternative sources before concluding sole source is appropriate. Adequate market research includes: searching SAM.gov and contractor databases using multiple relevant keywords; reviewing industry association directories and technical publications; directly contacting 3-5 potentially qualified contractors with capability inquiries; documenting responses received and technical reasons why alternatives don't meet requirements; and issuing formal Sources Sought notices for high-value contracts. Inadequate market research (e.g., "Google search found no alternatives") is the most common reason sole source justifications are rejected in audits and protests.
Are there small business requirements for sole source contracts?
Federal sole source contracts over $7.5 million require subcontracting plans demonstrating good-faith effort to include small businesses, including specific percentage goals for small, small disadvantaged, women-owned, veteran-owned, service-disabled veteran-owned, and HUBZone businesses. If the sole source contractor IS a small business, separate subcontracting goals don't apply. Some federal programs reserve sole source awards specifically for small businesses (8(a) program, HUBZone sole source authority). State and local requirements vary—many states require small or local business utilization plans even for sole source contracts above specified thresholds.
Conclusion
Sole source procurement serves as an essential tool for addressing construction situations where competition is impractical or impossible. When used appropriately—for genuine emergencies, truly unique capabilities, or compelling time constraints—sole source procurement delivers value by enabling rapid response and accessing specialized expertise.
However, sole source procurement carries inherent risks: higher prices, favoritism potential, and accountability challenges. These risks demand robust justification, thorough market research, aggressive price negotiation, and enhanced oversight.
Both government agencies and contractors benefit from understanding sole source procurement frameworks:
Agencies should exhaust competitive alternatives before resorting to sole source procurement, document justifications with audit-quality evidence, negotiate aggressively to achieve fair pricing, and implement enhanced monitoring of non-competitive contracts.
Contractors should develop genuinely unique capabilities that position them as sole source candidates, maintain relationships and visibility with key agencies, respond to sole source opportunities with detailed capability demonstrations, and negotiate in good faith while expecting intense scrutiny.
The most successful sole source procurements share three characteristics: clear documentation of why competition is impractical, transparent justification that withstands public scrutiny, and pricing that demonstrates the agency protected taxpayer interests despite non-competition.
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For additional guidance on government construction procurement, explore our guides on Federal Construction Bids and Government Construction Bids to build a complete competitive strategy.