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The term "no-bid contract" is a popular phrase for what is officially known as a "sole source contract" which means that there is only one person or company that can provide the contractual services needed, so any attempt to obtain bids would only result in that person or company bidding on it.
A no-bid contract is awarded usually, but not always, by a government group after soliciting and negotiating with only one firm (see 48 CFR). These contracts can be negotiated much more quickly than a typical competitive contract because there is no due-process but on the other hand, they are often fraught with suspicion that the company used illegal or immoral means to exclude competitors (usually by cronyism or bribery).
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 commissioning law. Usually the reason is cost and urgency as a no-bid contract allows the government to get contractors working as quickly as possible in an "urgent" situation.
Legal reasons for sole source contracts in the USA 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. On international agreement; 5. Sole source is authorized or required by law, e.g., socio-economic programs; 6. National security and 7. The public interest.