On September 26, 2019, the DOD issued a final rule to implement statutory restrictions on the use of the LPTA source selection process. The final rule is intended to address the perceived overuse of the LPTA process by establishing clear conditions that must be met before DOD agencies may utilize the LPTA process for a given source selection. The rule became effective on October 1, 2019.1
FAR 15.101-2 defines the LPTA process as being appropriate when the best value to the procuring agency is expected to result from the selection of the technically acceptable proposal with the lowest price. The LPTA process is one of many that may be used to design competitive acquisition strategies and is part of FAR Part 15's best value continuum. The LPTA process has been the subject of significant criticism recently. It has been described as an overused process that results in the U.S. government obtaining low quality products in a "race to the bottom," where quality and functionality often may not be available at the absolute lowest pricing level.
The DOD final rule implements applicable sections of the National Defense Authorization Acts for fiscal year 2017 and 2018. The new DOD rule effectively amends the Defense Federal Acquisition Regulations Supplement (DFARS) by incorporating the statutorily mandated limitations and prohibitions on the use of the LPTA process and updating the DFARS Procedures, guidance, and information (PGI) to provide guidance to agency officials in this area.
The key provisions of the rule are at DFARS 215.101-2-70. This new section contains guidance regarding the use of LPTA procedures that can be placed into three categories: situations where the use of the LPTA process is limited, situations where the LPTA process should be avoided, and situations where use of the LPTA process is prohibited.
DFARS 215.101-2-70(a)(1) limits the use of the LPTA process to situations where:
- 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 (see PGI 215.101-2-70(a)(1)(vi) for assistance with evaluating whether a requirement satisfies this limitation).
- The contract file contains a determination that the lowest price reflects full life-cycle costs (as defined at FAR 7.101) of the product(s) or service(s) being acquired (see PGI 215.101-2-70(a)(1)(vii) for information on obtaining this determination).
- The contracting officer documents the contract file describing the circumstances justifying the use of the LPTA source selection process.
DFARS 215.101-2-70(a)(2) requires contracting officers to avoid, to the maximum extent possible, the use of the LPTA process in procurements that are predominately for the acquisition of:
- Information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, or other knowledge-based professional services.
- Items designated by the requiring activity as personal protective equipment (except where prohibited by DFARS 215.101-2-70(b)).
- Services designated by the requiring activity as knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.
Finally, DFARS 215.101-2-70(b) prohibits the use of the LPTA process for the procurement of:
- Personal protective equipment or aviation critical safety items, when the requiring activity advises the contracting officer that the level of quality or failure of the equipment or item could result in combat casualties.
- Engineering and manufacturing development for a major defense acquisition program for which budgetary authority is requested beginning in fiscal year 2019.
- Auditing contracts, where contracting officers are required to make award decisions based on best value factors and criteria, as determined by the resource sponsor (in accordance with agency procedures).
Contractor impact and action
Contractors should familiarize themselves with the provisions of this new rule as the preference for LPTA in the DOD environment has changed. Contractors may consider filing timely pre-award bid protests where LPTA source selection methods are being used by an agency in a manner that does not conform to the requirements of this rule.