The annual Department of Defense (DoD) authorization bill has long been used to impose government-wide procurement reforms that extend beyond the DoD. The recently enacted National Defense Authorization Act (NDAA) continues this tradition, by restricting civilian agencies’ use of the much-derided lowest price, technically acceptable (LPTA) procurement process, instead of the more fulsome best value trade-off process. The new NDAA now imposes limitations on the use of LPTA procurements that were previously imposed on the DoD and applies those limitations government-wide.
For many years, contractors and commentators have criticized the LPTA acquisition process for its many limitations and disadvantages, including: (1) reduced discretion; (2) decreased innovation; (3) increased performance risk; and (4) decreased competition. Section 880 of the FY 2019 NDAA demonstrates that Congress is also aware of LPTA’s limitations and is further restricting its use.
LPTA procurements force source selection officials to choose the lowest priced proposal that meets the minimum technical specifications, regardless of the benefits offered by other proposals. FAR 15.101-2 governs the use of the LPTA process and currently provides that its use is appropriate when “best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price.” As explained below, the FAR Council must revise this language to impose additional limits on when the LPTA process may be used.
After the LPTA process gained popularity in the early 2000s when procurement officials grappled with shrinking budgets and increasing demands, Congress and federal agencies began expressing concern about the unsuitability of the LPTA process for many acquisitions and have restricted its use. Most recently, Congress enacted the FY 2019 NDAA, Pub.L. 115-232, which the President signed into law on August 13, 2018. Section 880 of this act applies to the civilian agencies many of the limitations that have restricted the use of the LPTA process in DoD procurements during the past few years. The FAR should be revised by December 11, 2018, to impose such requirements.
Section 880 makes a strong policy statement to limit the use of the LPTA process, stating that “[i]t shall be the policy of the United States Government to avoid using lowest price technically acceptable source selection criteria in circumstances that would deny the Government the benefits of cost and technical tradeoffs in the source selection process.” (Emphasis added.) The statute seeks to implement this policy by requiring that the FAR be amended within 120 days of enactment to allow the use of LPTA only when the following six criteria are all satisfied:
(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 request for proposal;
(3) 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;
(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 a lowest price technically acceptable evaluation methodology in the contract file; and
(6) the executive agency has determined that the lowest price reflects full life-cycle costs, including for operations and support.
In addition to these six criteria, Section 880 also explicitly prohibits the use of LPTA procedures for three categories of acquisitions. Section 880(c) provides that “to the maximum extent practicable,” the use of LPTA procedures “shall be avoided” when purchasing “(1) information technology services, cybersecurity 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; (2) personal protective equipment; or (3) knowledge-based training or logistics services in contingency operations or other operations outside the United States…”
Readers may recognize the six criteria and three categorical limitations listed above, because Section 880 utilizes the same six criteria and three categorical limitations that were imposed by Section 813 of the FY 2017 NDAA for DoD procurements. Those provisions will now apply to all executive agencies. As is often the case, procurement reforms that originated in the DoD are being applied to all federal agencies.
Although the regulations required by the NDAA must still be implemented, Congress has mandated further limitations on the use of LPTA procurements. Contractors will now have a stronger basis to challenge a civilian agency’s decision to use an LPTA procurement.