As we noted in a blog post in December 2016, “LPTA Out, Fixed Price Contracts In,” the Department of Defense (DoD) has been moving to restrict the Lowest Price Technically Acceptable (LPTA) evaluation methodology, which requires award to the lowest-price offeror that meets the minimum requirements regardless of whether more expensive solutions are optimal. Further, in 2016 legislation went into effect requiring that limitations on the use of LPTA evaluations be codified in the Defense Federal Acquisition Regulation Supplement (DFARS).
New Restrictions on LPTA Evaluations
On September 26, 2019, DoD issued a final rule that amends the DFARS to implement that legislation. The new rule, which was mandated by Section 813 of the National Defense Authorization Act (NDAA) for 2017, as amended by section 822 of the NDAA for 2018, establishes that the LPTA evaluation methodology shall only be used when the following conditions are met:
- Minimum requirements can be described clearly and comprehensively and expressed in terms of performance objectives, measures, and standards that will be used to determine the acceptability of offers.
- No, or minimal, value will be realized from a proposal that exceeds the minimum technical or performance requirements.
- The proposed technical approaches will require no, or minimal, subjective judgment by the source selection authority as to the desirability of one offeror’s proposal versus a competing proposal.
- The source selection authority has a high degree of confidence that reviewing the technical proposals of all offerors would not result in the identification of characteristics that could provide value or benefit.
- No, or minimal, additional innovation or future technological advantage will be realized by using a different source selection process.
- Goods to be procured are predominantly expendable in nature, are nontechnical, or have a short life expectancy or short shelf life.
- The contract file contains a determination that the lowest price reflects full life-cycle costs of the product(s) or service(s) being acquired.
- The contracting officer documents the contract file describing the circumstances justifying the use of the lowest price technically acceptable source selection process.
In addition to establishing the conditions necessary for the use of LPTA, the DoD’s new rule also articulates that the use of LPTA should be “avoided, to the maximum extent practicable” in procurements for advanced electronic testing, cybersecurity services, information technology, systems engineering and technical assistance services, other knowledge-based professional services, personal protective equipment, or certain services in support of contingency or other operations outside the United States. Additionally, the new rule outright prohibits the use of LPTA when purchasing:
- Personal protective equipment if the level of quality or failure of the item could result in combat casualties.
- Aviation critical safety items as defined in 10 U.S.C. 2319(g).
- Engineering and manufacturing development of a major defense acquisition program for which budgetary authority is requested beginning in FY 2019; and the acquisition of auditing services.
Changes May Lead to More Protests
While the implementation is welcome given that the LPTA evaluation methodology has arguably been utilized in procurement for which consideration of the technical advantages of a more expensive proposal would benefit the government, the restriction may well result in more protest activity. LPTA awards are more difficult to challenge as the award criteria and the evaluation are simple – does it pass technically and is it the cheapest. Evaluations that require a best value trade off involve more sophisticated analysis of the potential benefits of more expensive proposals in comparison to lower cost solutions, presenting greater challenges to source selection authorities and more room for error. While DoD is to be commended on the implementation of the statutory LPTA restrictions, it will be important for DoD to also provide to the contracting corps the training, personnel and funding required to conduct these more sophisticated evaluations.