FAR Proposal to Restrict the Use of LPTA Source Selection

The FAR (Federal Acquisition Regulations) have issued a proposed regulation to limit the use of LPTA (Lowest Price Technically Acceptable) source selection criteria in many circumstances. This proposal is based on provisions in the FY 2019 NDAA (National Defense Authorization Act), specifically, Section 880.

LPTA source selection methodologies are widely used throughout the Government and one of the easiest ways to award contracts. Some have referred to LPTA as the lazy man's guide to contracting because the Government needs only to determine whether a bid is technically acceptable. After that, the lowest price wins.

There has been a growing realization within the Government however that the use of LPTA in many cases, denies the Government the benefits of cost and technical trade-offs in the source selection process. A contractor that is able to add enhancements to its 'product' or 'service' that exceeds minimum specifications, should be given consideration for those enhancements if they would prove useful to the Government.

The proposed regulation will significantly reduce the use of LPTA source selection. In fact, the requirements for using LPTA are conditional on meeting the following requirements:

1. An executive agency is able to comprehensively and clearly describe the minimum requirements expressed in terms of performance objectives, measures, and standards that will be used to determine acceptability of offers
2. The executive agency would realize no, or minimal, value from a contract proposal exceeding the minimum technical or performance requirements set forth in the solicitation (good luck justifying this condition).
3. the proposed technical approaches will require no, or minimal, subjective judgment by the source selection authority as to the desirability or one offeror's proposal versus a competing proposal.
4. The executive agency has a high degree of confidence that a review of technical proposals of offerors other than the lowest bidder would not result in the identification of factors that could provide value or benefit to the executive agency.
5. The contracting officer has included a justification for the use of an LPTA evaluation methodology in the contract file; and
6. The executive agency has determined that the lowest price reflects total costs, including for operations and support.

Additionally, section 880 requires that the use of LPTA source selection criteria be avoided, to the maximum extent practicable, in procurements that are predominantly for the acquisition of:

• information technology services,
• cyber-security services,
• systems engineering and technical assistance services,
• advanced electronic testing,
• audit or audit readiness services,
• health care services and records,
• telecommunications devices and services, or
• other knowledge-based professional services.

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.

Lowest-Price Technically Acceptable (LPTA) Does Not Always Equate to "Best Value"

Rep. Mark Meadows (NC) introduced a bill last month that would extend certain prohibitions that now apply to DoD contracts, to all executive agencies. In short, the bill establishes a new policy to avoid using lowest price technically acceptable (LPTA) source selection criteria in circumstances that would deny the Government the benefits of cost and technical trade-offs in the source selection process.

The theory goes something like this. LPTA contracts have not always delivered the outcomes that were initially expected. Cheapest does not always equate to the best value in procuring professional services.

Under this bill, federal agencies will have flexibility to seek and obtain innovative solutions, better outcomes and ultimately the best value on behalf of taxpayers.

When it comes to applying LPTA in contract bids, federal agencies must:

1. Comprehensively and clearly describe the minimum requirements in terms of performance objectives, measures and standards that will be used to determine the acceptability of offers.
2. Establish that there is no value in a contract bid that might exceed the technical and performance requirements.
3. Require that technical approaches require no subjective judgment by the source selection authority for one proposal over another
4. That the source selection authority reviewing technical proposals have high confidence that bids other than the lowest would not result in identifying factors that could provide value or benefit to the executive agency
5. That the contract officer provide justification for the use of LPTA evaluation methodology in the contract file.
6. The agency determines that the LPTA reflects full life-cycle costs, including operations and support.

This bill also limits LPTA use on the following:

• information technology services,
• cybersecurity services
• systems engineering and technical assistance services,
• advanced electronic testing
• audit or audit readiness services
• other knowledge-based training or logistics services for overseas contingency operations.

Sounds to us like this bill will result in a lot more work for contracting officers - primarily with a need to prepare more justification and documentation.