Government Contracts Monitor

So Long, Farewell, Goodbye, to Low Price Technically Acceptable

January 9, 2019

The Department of Defense (“DoD”) recently proposed a new rule (click here) that would restrict the use of the lowest price technically acceptable (“LPTA”) source selection method. The rule will apply to FAR Part 15 negotiated procurements, Federal Supply Schedule orders, commercial item acquisitions, simplified acquisitions, and orders against multiple award indefinite delivery contracts. The proposed rule makes clear that DoD contracting officers need to undertake a complete and well-reasoned analysis before determining that it is appropriate to conduct an LPTA procurement. In short, LPTA procurements are highly disfavored. Why?

First, when conducting an LPTA procurement, the agency’s source selection criteria elevates offerors’ costs (or prices) over their technical capability. Award is made to the lowest-priced offeror that submits a technically acceptable proposal.

Second, no amount of technical superiority can change the outcome. All an offeror need do to succeed is to meet the minimum mandatory requirements and have the lowest price.

While the original purpose of the LPTA process was to allow agencies to procure commercial goods and services (such as file cabinets, lawn services, etcetera) quickly and easily, without the need for complex technical review and best value analysis, over the years the use of the LTPA process has expanded into areas that now are believed to be inappropriate. Specifically, the LPTA procurement process has been repeatedly used to acquire goods and services of a complex nature where the quality of the goods and services and the offerors’ ability to perform as promised are important. In this regard, contractors and “customers” alike have complained that use of the LPTA selection processes is inappropriate where technical/quality differences are meaningful. In other words, where technical superiority is worth a price premium, the LPTA process should not be used.

The 2017 and 2018 National Defense Authorization Acts (“NDAAs”) speak to these concerns by greatly limiting an agency’s ability to employ LPTA as the source selection method. In accordance with the NDAA restrictions, the recently proposed rule prohibits the use of LPTA procedures to procure specific goods and services, including any engineering or manufacturing development efforts for major defense acquisition programs. This rule also provides that agencies should not use the LPTA process for acquisitions of “knowledge-based services”, such as those related to information technology and cybersecurity, or to acquire services that relate to contingency or other operations outside of the U.S.

A condition precedent to using the LPTA process is for the contracting officer to determine that each of the following criterion is present:

The agency’s minimum mandatory requirements can be described clearly, and in terms of performance objectives, measures, specifications and standards necessary to determine the acceptability of offerors;
No or “minimal” value will be achieved from a proposal that exceeds the minimum technical or performance requirements;
The Source Selection Authority (“SSA”) will be required to use little or no subjective judgment in reviewing technical proposals and determining the desirability of one proposal over another;
The SSA is highly confident that review of the technical proposals will not reveal characteristics or benefits that would provide real value or benefit to the government;
Little or no innovation or technological advantage would be realized from use of a difference source selection process;
The goods sought are nonessential in nature, non-technical, and/or have a short life expectancy;
The procurement file contains a determination that the lowest price reflects the full life-cycle cost of the products or goods being acquired; and
The procurement file contains a justification for the use of the LPTA source selection process and documents the considerations supporting such justification.

Although contracting officers have a good deal of discretion in acquisition planning decisions, the proposed rule signals the end of any widespread use of the LPTA procurement process. Against the backdrop of the numerous factors contracting officers are now required to consider, and the justification determination required, the number of LPTA procurements is likely to greatly diminish and, where LPTA is used, such procurements are likely to be vulnerable to successful pre-award protests.

Lindsay Simmons is responsible for the contents of this article.

Attorneys

Lindsay Simmons