Monday, December 11, 2017

2018 NDAA - New Prohibitions on Use of LPTA as a Basis for Contract Award

The Government's use of LPTA (lowest price technically acceptable) as a source selection technique has been very popular. It certainly drives prices down as bidders compete only on price and contracting officers like it because its less work for them. They don't have to consider the relative merits of benefits in excess of the basic requirements offered by competing proposals.

However, the Government is now realizing that the use of LPTA might be short-sited. In 2016, DoD tried limiting the use of LPTA techniques with the following guidance: LPTAs may be used in situations where the Government would not place any value on a product or service exceeding the Government's threshold technical or performance requirements and these requirements can be objectively defined in measurable terms."

In the 2017 NDAA (National Defense Authorization Act), Congress moved to further limit the use of LPTA techniques. That NDAA restricted DoD from using LPTA when purchasing (i) information technology services, (ii) cyber-security services, (iii) systems engineering and technical assistance services, (iv) advanced electronic testing, (v) audit or audit readiness services, (vi) other knowledge-based professional services, (vii) personal protective equipment, and (viii) knowledge-based training or logistics services in contingency operations.

The 2018 NDAA (expected to be signed into law shortly) places more limitations on the use of LPTA techniques. Under the new NDAA, LPTA can be used only where DoD would realize minimal innovation if LPTA was not used and when goods are purchased. Goods are defined as those that are predominantly expendable in nature, nontechnical, or have a short life expectancy or short shelf life (see Sec 822).

Additionally, the new NDAA will prohibit the use of LPTA techniques for the engineering and manufacturing development contract of a major defense acquisition program (see Sec 832).

It is apparent that the heyday of LPTA is over. That should be a good thing because it will allow prospective contractors to offer products as other than lowest prices.

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