Writing a Source Justification That Can’t be Refused (or Rejected)

In the complex world of federal procurement, where contracts worth millions or even billions of dollars hang in the balance, decisions must be made with precision and clarity. When it comes to justifying non-competitive acquisitions under FAR Part 6.302-1, one must adopt the mentality famously articulated in “The Godfather”: “It’s not personal, it’s strictly business.”

Source Justifications are more than just paperwork; they’re a beacon of accountability, transparency, and fairness in procurement. Through meticulous documentation of the rationale behind non-competitive acquisitions, procurement ensures the wise and ethical expenditure of every taxpayer dollar awarded to the prime contractor.

Source Justification Deficiences

Source justifications have been, and continue to be, one of the top (5) deficiencies identified during a Contract Purchasing System Review (CPSR). The Federal Acquisition Regulations (FAR) provides the framework for documenting robust source justifications, yet many, if not most, contractors often overlook or simply ignore the requirements. Procurement personnel regularly face an uncomfortable situation where they must either accept what is provided to them or risk delaying an award. This behavior is tantamount to regulatory negligence for which a company and its procurement department are responsible.

Under FAR Part 6.302-1, not only is the government required to provide a written justification when awarding a contract without competition, so are contractors. The lack of proper source justifications can lead to wasted resources as well as findings of deficiency in your process, which could result in continued surveillance of your purchasing system.

The Importance of Source Justifications

Diving into the intricacies of source justifications might seem as thrilling as watching paint dry. However, their importance cannot be overstated. Source justifications serve as a safeguard against potential abuses of power. For example, how many times has a buyer been told, “But the customer wants that company to do the work.”   “The customer” in this scenario is usually someone in a government program office, when in fact, under FAR 6.302-1, “the customer” is the Contracting Officer or someone with a warrant to bind the Government to performance. Second, if the “customer” wants a specific company, then it is the Contracting Officer who must issue express written direction to award to the named source.

Other commonly used justifications are that it would take too long or cost too much to find someone else. Like Veruca Salt swooning about wanting the goose that lays gold eggs for Easter, PMs can be heard saying, “I want it now.” Unfortunately, saying you want it now is insufficient for a justification. The key in creating an acceptable source justification lies in providing acceptable supporting evidence.  The case for why competition was not attempted must be supported with reasonable logic.  Here are a few common examples:

• Unacceptable delays: When buyers cite this method, the evidence provided very often fails to make the case.  In order to get it right, the buyer should provide insight into the full lead time required for this part, from receipt of purchase requisition (their buy signal) to the placement of the purchase order.  All too often, when looking at timelines laid out in this manner, it becomes evident that the buyer should have had sufficient time, but that there was a significant lag between buy signal and issuing a request for quote.
• Duplication of costs: The biggest mistake that’s made using this method is that only part of the story is provided.  For example, the buyer might document a total amount of non-recurring of $750,000.  The support for where that number comes from might even be fully sufficient.  However, it’s still not the full story.  If the company expects to purchase $25M of these items over the next 12 months, then the $750K only represents 3% of the coming year’s purchases.  Competition typically results in some amount of savings, so it’s reasonable to expect that this 3% could be recovered over the course of the year, setting up additional savings in future years.
• Customer directed: As noted previously, in order to support a “customer directed” source, there must be direction provided, in writing, from the warranted contracting officer. Otherwise, this method doesn’t withstand scrutiny.

It’s All on the Dashboard

SpendLogic’s Source Justification tool avoids all of these common mistakes, and more.  Whether the buyer chooses to complete the justification, or assigns it to someone else in the company, there’s no faster way to create an acceptable report.  SpendLogic avoids ambiguity with simple radio buttons to select which justification applies. Compliance checks provide real-time feedback as the report is being created.  SpendLogic ensures the right documentation is included every time.

For a quick and hassle-free introduction to SpendLogic, sign up for a demo.