Sole Source Justification Letter Template
Buying from one supplier is sometimes the only option, but it is also the purchase auditors question first. A written sole source justification shows that you looked for alternatives, judged the price and planned to reduce the dependency.
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Sole Source Justification Letter Template
Sole Source Justification
Company: Acme Precision Ltd Reference: SSJ-2026-017 Date: 2026-10-20 Prepared by: M. Okafor, Senior Buyer
Purchase summary
Supplier: Optica Instruments GmbH Item or service: Calibration standard artifact set, part CS-440 Estimated value: EUR 28,500 Basis for sole source: Compatibility with installed equipment
Why competition is not possible
The artifact set is traceable to the supplier's accredited lab and matches the interface of our installed coordinate measuring machine. Three other calibration houses were contacted and none offers this artifact.
Market research performed
| Source contacted | Date | Result |
|---|---|---|
Price reasonableness
Compared to the price paid in 2024 adjusted for the published steel index, and to the supplier's list price for two other customers shared in writing.
Plan to reduce dependency
Qualify a second source at the next equipment refresh in 2028 and request the interface specification now.
Approvals
Starting point only, not legal advice. Government-funded purchases have formal rules for noncompetitive awards; follow the clause that applies to your contract.
Find single-source risk in your ERP data
Optional: a read-only report listing items with one approved vendor and no alternates.
Optional. The tool and every export work without this. No spam.
How to complete it
Pick the basis honestly. 'We always buy from them' is not a basis. Valid reasons include a proprietary design, a customer drawing that names one source, compatibility with installed equipment, or a genuine emergency. Record who you contacted in the market research table, with dates and results, because that table is the evidence.
- Name the specific technical constraint, not a preference.
- List at least three sources you contacted.
- Attach any customer or engineering document that names the source.
Showing price reasonableness
Without competition you must find another way to show the price is fair. Common methods are comparison to previous purchases adjusted for an index, comparison to the supplier's published price list, a cost breakdown from the supplier, or prices the supplier charges other customers, shared in writing. For larger values ask for cost data and a should-cost view of the main elements.
Where it fits in your process
Attach the signed letter to the requisition or contract record in your ERP, and flag the vendor-item record as single source so planners see the risk. In flowdown contracts, check whether the customer must approve a noncompetitive award. Review the justification when the contract renews, since the original basis may no longer hold.
Common mistakes
Writing the justification after the order, copying one letter across many suppliers, leaving the price section empty and treating urgency created by late planning as an emergency. Another mistake is never revisiting it: sole sources become permanent unless someone owns the exit plan.
Frequently Asked Questions
What is the difference between sole source and single source?
Sole source means only one supplier can provide the item. Single source means you chose one supplier although others exist. Both need justification, but sole source is the stronger claim and needs more evidence.
Does urgency justify a sole source?
Only if the urgency was not caused by your own late planning and the delay would cause real harm. Record the consequence of delay and the other sources you tried to reach within the time available.
Who approves a sole source justification?
Usually the buyer prepares it, a technical owner confirms the need, and a purchasing or finance leader approves based on value. Your policy sets the thresholds.
How long is the justification valid?
Treat it as valid for the contract or order it supports. Review at renewal, at any major price change and whenever a new source appears in the market.
If you want single-source parts flagged automatically from your ERP item and vendor tables, Netray can build a read-only report or assistant for that.
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