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September 27, 2019 - Federal Procurement, Protests & Litigation, Defense, Compliance

DOD Promulgates Long-awaited Restrictions on LPTA Procurement

New DCMA Defective Pricing Pilot Team Will Possess Audit Resolution Authority

The Department of Defense (DOD) has promulgated the final rule restricting DOD’s use of Lowest Price Technically Acceptable (LPTA) acquisition methods. The final rule adopts, without any substantive changes, the proposed rule published last December and implements sections of the National Defense Authorization Acts for FY 2017 and 2018. The final rule can be found here. The new restrictions will be codified primarily at DFARS 215.101-2-70 and will take effect on October 1, 2019.

The final rule contains no surprises. Although the agency declined to stray from the specific demands of the statute, there still is much to like in the rule. It addresses deep frustrations with widespread abuse and overuse of the LPTA source-selection process by establishing clear conditions, all of which must be met before DOD agencies may use the method:

  • 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;
  • The contract file contains a determination that the lowest price reflects full life-cycle costs of the product(s) or service(s) being acquired; and
  • The contracting officer documents the contract file describing the circumstances justifying the use of the lowest price technically acceptable source selection process.

DFARS 215.101-2-70(a)(1).

The rule also prohibits DOD from using LPTA procedures when acquiring specific kinds of goods and services, such as:

  • 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;
  • 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;
  • Items designated by the requiring activity as an aviation-critical safety item, 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; and
  • Contracts for auditing services.

DFARS 215.101-2-70(a)(2), (b). For some of these goods and services, the prohibition is absolute. For others, agencies are admonished to avoid LPTA “to the maximum extent practicable.”

In addition, the rule requires contracting officers to document a justification to the procurement file before issuing a solicitation on an LPTA basis. DFARS 215.101-2-70(a)(1)(viii). This requirement will force agencies to think carefully before resorting to LPTA procedures, and will provide a target for protesters that think a particular procurement fails to satisfy the new regulatory prerequisites.

The new restrictions apply, however, only to DOD procurements. A FAR case is currently in process to address more recent statutory restrictions on civilian agencies’ use of LPTA procurement methods for “health care services and records” and “telecommunication devices and services.” Keep an eye on this blog for news on that effort. It would be ideal to have a single, uniform, government-wide regulation for the use of LPTA procedures (and some of the commenters on the DOD rule unsuccessfully suggested exactly that), but that is likely too much to hope for at this time.