The term "no-bid contract" is a popular phrase for what is officially known as a "sole source contract". A sole source contract implies that there is only one person or company that can provide the contractual services needed, and any attempt to obtain bids would only result in one person or company being available to meet the need. It is awarded usually, but not always, by a government group after soliciting and negotiating with only one firm (see 48 CFR

Code of Federal Regulations

The Code of Federal Regulations is the codification of the general and permanent rules and regulations published in the Federal Register by the executive departments and agencies of the Federal Government of the United States.The CFR is published by the Office of the Federal Register, an agency...

 § 2.101). These contracts can be negotiated much more quickly than a typical competitive contract but they are often fraught with suspicion that the company used illegal or immoral means to exclude competitors (usually by cronyism

Cronyism

Cronyism is partiality to long-standing friends, especially by appointing them to positions of authority, regardless of their qualifications. Hence, cronyism is contrary in practice and principle to meritocracy....

 or bribery

Bribery

Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...

). Nevertheless, U.S. law permits the government to award sole source contracts under specified circumstances (48 CFR Ch. 1, Part 6) but no-bid contracts are illegal under European Union

European Union

The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 commissioning law.

Urgency is often the rationale for sole source contracts, and cost uncertainty is the rationale for cost-plus contract

Cost-plus contract

A cost-plus contract, also termed a Cost Reimbursement Contract, is a contract where a contractor is paid for all of its allowed expenses to a set limit plus additional payment to allow for a profit. Cost-reimbursement contracts contrast with fixed-price contract, in which the contractor is paid a...

s. They permit the government to get contractors working as quickly as possible. Examples of potential no-bid contracts include those awarded to Blackwater

Blackwater Worldwide

Xe Services LLC, better known by its former names, Blackwater USA and Blackwater Worldwide, is a private military company founded in 1997 by Erik Prince and Al Clark.. Xe is currently the largest of the U.S. State Department's three private security contractors...

 and Halliburton

Halliburton

Halliburton is the world's second largest oilfield services corporation with operations in more than 70 countries. It has hundreds of subsidiaries, affiliates, branches, brands and divisions worldwide and employs over 50,000 people....

 by the United States government

Federal government of the United States

The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

 for work relating to the War in Iraq. Both of these companies have been accused of operating unethically. While competitive contracts have been awarded in very short times, such speedy procurements are not easily done and are thus relatively unusual.

Legal reasons for sole source contracts include :

1. only one firm has a product that will meet the projects needs or only one firm can do the work;
2. the existence of an unusual and compelling urgency;
3. for purposes of industrial mobilization or expert services;
4. an international agreement;
5. sole source is authorized or required by law, e.g., socio-economic programs;
6. national security and
7. the public interest.

Use of such authorities requires written justification and approval at specified levels. See 48 CFR Ch. 1, Subpart 6.3.

See also

• Campaign finance
  Campaign finance
  Campaign finance refers to all funds that are raised and spent in order to promote candidates, parties or policies in some sort of electoral contest. In modern democracies such funds are not necessarily devoted to election campaigns. Issue campaigns in referendums, party activities and party...
  
  
• Defense Contract Management Agency
  Defense Contract Management Agency
  The Defense Contract Management Agency is the agency of the United States federal government responsible for performing contract administration services for the Department of Defense and other authorized federal agencies. Its headquarters is at Fort Lee, Va...
  
  
• Cronyism
  Cronyism
  Cronyism is partiality to long-standing friends, especially by appointing them to positions of authority, regardless of their qualifications. Hence, cronyism is contrary in practice and principle to meritocracy....
  
  
• Revolving door (politics)
  Revolving door (politics)
  The revolving door is the movement of personnel between roles as legislators and regulators and the industries affected by the legislation and regulation and on within lobbying companies. In some cases the roles are performed in sequence but in certain circumstances may be performed at the same time...