In the latest Weekly Wright Report:
- Trying to Combat the Race to the Bottom, the DOD Limits LPTA Contracting Method – read now
Trying to Combat the Race to the Bottom, the DOD Limits LPTA Contracting Method
On October 1, 2019 a DOD final rule limiting the use of the Lowest Price Technically Acceptable (“LPTA”) contract award method became effective. See Defense Federal Acquisition Regulation Supplement (DFARS), Section 215.101-2-70. This procurement method involves evaluating the technical aspects of a proposal on an acceptable/unacceptable basis – essentially pass/fail. If acceptable, the contract is then awarded to the lowest priced bid. A recent Government Accountability Office (GAO) report (GAO 19-54) found that about 26 percent of the DOD’s contracts and orders valued $5 million and above were awarded using the LPTA process. The LPTA approach is a good way to buy common off-the-shelf items or standard goods and services, however, many critics believe that LPTA is not suited for buying highly technical goods or services. The 2017 and 2018 NDAA required the DOD to limit the use of LPTA.
The DOD final rule provides that the LPTA contracting method shall only be used by the DOD when: (1) 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; (2) no, or minimal, value will be realized from a proposal that exceeds the minimum technical or performance requirements; (3) the proposed technical approaches will require no, or minimal, “subjective judgment” by the government as to the desirability of one offeror’s proposal versus a competing proposal; (4) the government has a “high degree of confidence” that reviewing the bids of all offerors would not result in the identification of characteristics that could provide value or benefit; (5) no, or minimal, additional “innovation or future technological advantage” will be realized by using a different contracting process; (6) items to be procured are “predominantly expendable in nature, are nontechnical, or have a short life expectancy or short shelf life;” (7) the government makes a written determination that the “lowest price reflects full life-cycle costs of the items being purchased; and (8) the contracting officer “documents the contract file describing the circumstances justifying” the use of the LPTA source selection process.
The final rule also provides that contracting officers “shall avoid, to the maximum extent practicable,” utilizing the LPTA method in procurements that predominately involve the purchase of: (1) Information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, or other knowledge-based professional services; (2) personal protective equipment; or (3) Services designated as “knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.” The DOD final rule also expressly prohibits the use of the LPTA method for purchasing: (1) personal protective equipment or aviation critical safety items where lack of quality could result in combat casualties; (2) major defense acquisition program items; and (3) auditing contracts.
On October 2, 2019, the DOD, GSA and NASA proposed to amend the FAR to implement the government’s policy to avoid using the LPTA contracting method in circumstances that would deny the government the benefits of cost and technical tradeoffs. Contact the WCS Government Contracting Group to learn more about these important government contracting changes.
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