Effective October 1, 2019, the U.S. Department of Defense (DOD) issued a final version of a long-awaited rule that restricts the DOD's use of lowest-price technically acceptable (LPTA) procurements. The final rule will be codified at DFARS 215.101-2-70.
The final rule implements sections of the National Defense Authorization Acts (NDAAs) for FY 2017 and 2018. The 2017 NDAA set forth the original policy requiring that the DOD avoid using LPTA evaluations when doing so would deny DoD the benefits of cost and technical tradeoffs. The 2017 NDAA required that six conditions be met before the DOD could use LPTA procurements and set forth a priority for best value source selection. The 2018 NDAA reiterated the DOD's preference for best value source selection and added two conditions to the original six set forth in the 2017 NDAA.
The final rule brings much-needed guidance to DOD contracting officers who have been awaiting such guidance since the original issuance of the 2017 NDAA in late 2016. The final rule explains the implementation of the new rules and regulations and attempts to address any public comments and concerns. No changes were made to the proposed rule as a result of any public comments.
The final rule requires that the following eight conditions be met before LPTA source selection procedures can be used in a DOD procurement:
- 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.
Furthermore, contracting officers are required to avoid LPTA procurements to the "maximum extent practicable" in procurements involving the following types of goods and/or services:
- 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; or
- 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.
The use of LPTA procedures is expressly prohibited in procurements for the following goods and/or services:
- Items designated by the requiring activity as personal protective equipment or 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.
The new restrictions, while a long time coming, should certainly lead to a decrease in the amount of DOD procurements subject to LPTA source selection procedures. On the other hand, the rule could also lead to an increased number of protests, as DOD contracting officers attempt to navigate and implement the new rules while facing increased scrutiny in their choice of source selection procedures. Note, however, that if a contractor believes that the DOD has incorrectly applied LPTA source selection procedures to a given procurement, such a protest would be to the terms of the solicitation and must therefore be made prior to the time for the submission of proposals at either the GAO or U.S. Court of Federal Claims. As is often the case, it remains to be seen what unintended consequences may stem from these rules; yet the restriction imposed on the use of LTPA procedures is generally a welcome sign.