diff --git a/awx/ui/client/src/inventories-hosts/inventories/related/sources/add/sources-add.controller.js b/awx/ui/client/src/inventories-hosts/inventories/related/sources/add/sources-add.controller.js
index 96c04b7eac..d62933314b 100644
--- a/awx/ui/client/src/inventories-hosts/inventories/related/sources/add/sources-add.controller.js
+++ b/awx/ui/client/src/inventories-hosts/inventories/related/sources/add/sources-add.controller.js
@@ -18,8 +18,9 @@ export default ['$state', '$stateParams', '$scope', 'SourcesFormDefinition',
         init();
 
         function init() {
+            $scope.mode = 'add';
             // apply form definition's default field values
-            GenerateForm.applyDefaults(form, $scope);
+            GenerateForm.applyDefaults(form, $scope, true);
             $scope.canAdd = inventorySourcesOptions.actions.POST;
             $scope.envParseType = 'yaml';
             initSources();
@@ -46,36 +47,6 @@ export default ['$state', '$stateParams', '$scope', 'SourcesFormDefinition',
             }
         };
 
-        // Detect and alert user to potential SCM status issues
-        var checkSCMStatus = function () {
-            if (!Empty($scope.project)) {
-                Rest.setUrl(GetBasePath('projects') + $scope.project + '/');
-                Rest.get()
-                    .success(function (data) {
-                        var msg;
-                        switch (data.status) {
-                        case 'failed':
-                            msg = "<div>The Project selected has a status of \"failed\". You must run a successful update before you can select an inventory file.";
-                            break;
-                        case 'never updated':
-                            msg = "<div>The Project selected has a status of \"never updated\". You must run a successful update before you can select an inventory file.";
-                            break;
-                        case 'missing':
-                            msg = '<div>The selected project has a status of \"missing\". Please check the server and make sure ' +
-                                ' the directory exists and file permissions are set correctly.</div>';
-                            break;
-                        }
-                        if (msg) {
-                            Alert('Warning', msg, 'alert-info alert-info--noTextTransform', null, null, null, null, true);
-                        }
-                    })
-                    .error(function (data, status) {
-                        ProcessErrors($scope, data, status, form, { hdr: 'Error!',
-                            msg: 'Failed to get project ' + $scope.project + '. GET returned status: ' + status });
-                    });
-            }
-        };
-
         // Register a watcher on project_name
         if ($scope.getInventoryFilesUnregister) {
             $scope.getInventoryFilesUnregister();
@@ -83,7 +54,6 @@ export default ['$state', '$stateParams', '$scope', 'SourcesFormDefinition',
         $scope.getInventoryFilesUnregister = $scope.$watch('project', function (newValue, oldValue) {
             if (newValue !== oldValue) {
                 getInventoryFiles(newValue);
-                checkSCMStatus();
             }
         });
 
@@ -118,7 +88,6 @@ export default ['$state', '$stateParams', '$scope', 'SourcesFormDefinition',
             });
         };
 
-        $scope.projectBasePath = GetBasePath('projects');
         $scope.credentialBasePath = GetBasePath('credentials') + '?credential_type__kind__in=cloud,network';
 
         $scope.sourceChange = function(source) {
@@ -144,10 +113,11 @@ export default ['$state', '$stateParams', '$scope', 'SourcesFormDefinition',
             }
 
             if (source === 'scm') {
-              $scope.overwrite_vars = true;
-              $scope.inventory_source_form.inventory_file.$setPristine();
+                $scope.projectBasePath = GetBasePath('projects')  + '?not__status=never updated';
+                $scope.overwrite_vars = true;
+                $scope.inventory_source_form.inventory_file.$setPristine();
             } else {
-              $scope.overwrite_vars = false;
+                $scope.overwrite_vars = false;
             }
 
             // reset fields
diff --git a/awx/ui/client/src/inventories-hosts/inventories/related/sources/edit/sources-edit.controller.js b/awx/ui/client/src/inventories-hosts/inventories/related/sources/edit/sources-edit.controller.js
index f4a68679ed..acef7d2c82 100644
--- a/awx/ui/client/src/inventories-hosts/inventories/related/sources/edit/sources-edit.controller.js
+++ b/awx/ui/client/src/inventories-hosts/inventories/related/sources/edit/sources-edit.controller.js
@@ -8,15 +8,15 @@ export default ['$state', '$stateParams', '$scope', 'ParseVariableString',
     'rbacUiControlService', 'ToJSON', 'ParseTypeChange', 'GroupsService',
     'GetChoices', 'GetBasePath', 'CreateSelect2', 'GetSourceTypeOptions',
     'inventorySourceData', 'SourcesService', 'inventoryData', 'inventorySourcesOptions', 'Empty',
-    'Wait', 'Rest', 'Alert', 'ProcessErrors',
+    'Wait', 'Rest', 'Alert',
     function($state, $stateParams, $scope, ParseVariableString,
         rbacUiControlService, ToJSON,ParseTypeChange, GroupsService,
         GetChoices, GetBasePath, CreateSelect2, GetSourceTypeOptions,
         inventorySourceData, SourcesService, inventoryData, inventorySourcesOptions, Empty,
-        Wait, Rest, Alert, ProcessErrors) {
+        Wait, Rest, Alert) {
 
         function init() {
-            $scope.projectBasePath = GetBasePath('projects');
+            $scope.projectBasePath = GetBasePath('projects') + '?not__status=never updated';
             $scope.canAdd = inventorySourcesOptions.actions.POST;
             // instantiate expected $scope values from inventorySourceData
             _.assign($scope,
@@ -136,33 +136,6 @@ export default ['$state', '$stateParams', '$scope', 'ParseVariableString',
                         Wait('stop');
                     });
             }
-
-            if (!Empty($scope.project)) {
-                Rest.setUrl(GetBasePath('projects') + $scope.project + '/');
-                Rest.get()
-                    .success(function (data) {
-                        var msg;
-                        switch (data.status) {
-                        case 'failed':
-                            msg = "<div>The Project selected has a status of \"failed\". You must run a successful update before you can select an inventory file.";
-                            break;
-                        case 'never updated':
-                            msg = "<div>The Project selected has a status of \"never updated\". You must run a successful update before you can select an inventory file.";
-                            break;
-                        case 'missing':
-                            msg = '<div>The selected project has a status of \"missing\". Please check the server and make sure ' +
-                                ' the directory exists and file permissions are set correctly.</div>';
-                            break;
-                        }
-                        if (msg) {
-                            Alert('Warning', msg, 'alert-info alert-info--noTextTransform', null, null, null, null, true);
-                        }
-                    })
-                    .error(function (data, status) {
-                        ProcessErrors($scope, data, status, null, { hdr: 'Error!',
-                            msg: 'Failed to get project ' + $scope.project + '. GET returned status: ' + status });
-                    });
-            }
         }
 
         function initSourceSelect() {
diff --git a/awx/ui/client/src/inventories-hosts/inventories/related/sources/lookup/sources-lookup-project.route.js b/awx/ui/client/src/inventories-hosts/inventories/related/sources/lookup/sources-lookup-project.route.js
index 14614b24d1..53869691a7 100644
--- a/awx/ui/client/src/inventories-hosts/inventories/related/sources/lookup/sources-lookup-project.route.js
+++ b/awx/ui/client/src/inventories-hosts/inventories/related/sources/lookup/sources-lookup-project.route.js
@@ -4,6 +4,7 @@ export default {
             value: {
                 page_size:"5",
                 order_by:"name",
+                not__status:"never updated",
                 role_level:"use_role",
             },
             dynamic:true,
diff --git a/awx/ui/client/src/shared/directives.js b/awx/ui/client/src/shared/directives.js
index 4fff94bca1..2967ffaba5 100644
--- a/awx/ui/client/src/shared/directives.js
+++ b/awx/ui/client/src/shared/directives.js
@@ -564,10 +564,6 @@ function(ConfigurationUtils, i18n, $rootScope) {
                         _doAutoPopulate();
                     }
                 });
-
-                if (attrs.watchbasepath === 'projectBasePath') {
-                    _doAutoPopulate();
-                }
             }
 
             function _doAutoPopulate() {
diff --git a/awx/ui/client/src/shared/form-generator.js b/awx/ui/client/src/shared/form-generator.js
index ff3bcbf568..10923c5329 100644
--- a/awx/ui/client/src/shared/form-generator.js
+++ b/awx/ui/client/src/shared/form-generator.js
@@ -375,11 +375,13 @@ angular.module('FormGenerator', [GeneratorHelpers.name, 'Utilities', listGenerat
                 return this.build(options);
             },
 
-            applyDefaults: function (form, scope) {
-                // Note: This is a hack. Ideally, mode should be set in each <resource>-<mode>.controller.js
-                // The mode is needed by the awlookup directive to auto-populate form fields when there is a
-                // single related resource.
-                scope.mode = this.mode;
+            applyDefaults: function (form, scope, ignoreMode) {
+                if(!ignoreMode) {
+                    // Note: This is a hack. Ideally, mode should be set in each <resource>-<mode>.controller.js
+                    // The mode is needed by the awlookup directive to auto-populate form fields when there is a
+                    // single related resource.
+                    scope.mode = this.mode;
+                }
 
                 for (var fld in form.fields) {
                     if (form.fields[fld]['default'] || form.fields[fld]['default'] === 0) {