New Rule Issued by the Department of Defense to Restrict Use of the LPTA Selection Process

On September 26, 2019, the Department of Defense (DOD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to significantly restrict DOD’s use of Lowest Price Technically Acceptable (LPTA) source selection procedures.

The new rule, which went into effect on October 1, 2019, should not come as a surprise to federal government contractors. The new rule, contained in DFARS 215.101-2-70, implements sections of the FY 2017 and FY 2018 National Defense Authorization Acts and has not substantively changed since it was first proposed in December 2018.

DFARS 215.101-2-70 addresses long-held concerns about the overuse of the LPTA source selection process within DOD. A September 2019 Report issued by the Government Accountability Office (GAO) found that selected DOD components used LPTA source selection procedures for approximately 25% of competitive contracts and task orders valued at $5 million or more in the fiscal year 2018, whereas selected civilian agencies only used LPTA procedures in about 7% of such procurements.

Under the new rule, the following eight conditions all must be satisfied before LPTA source selection procedures can be used in a DOD procurement:

1. 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;
2. No, or minimal, value will be realized from a proposal that exceeds the minimum technical or performance requirements;
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 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;
5. No, or minimal, additional innovation or future technological advantage will be realized by using a different source selection process;
6. Goods to be procured are predominantly expendable in nature, are nontechnical, or have a short life expectancy or short shelf-life;
7. 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
8. The contracting officer documents the contract file describing the circumstances justifying the use of the lowest-price technically acceptable source selection process.

Additionally, Section 215.101-2-70 restricts DOD from using the LPTA source selection process to the “maximum extent practicable,” for the procurement 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; 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.

Further, Section 215.101-2-70 expressly prohibits the use of LPTA source selection procedures for procurements of:

• 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 the fiscal year 2019; and
• Auditing services.

Finally, the new 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). DOD advised commentators that the DFARS Procedures, Guidance, and Information (PGI) will provide additional guidance to contracting officers on “when and from whom to seek additional guidance on whether a requirement satisfies the limitations at 215.101-2-70(a)(1).”

The restrictions above apply to any DOD acquisition that could potentially utilize the LPTA source selection process. In response to a comment on the final rule, DOD explained that it is not the intent to prohibit all use of the LPTA source selection process. Rather, the goal is to identify “meaningful circumstances that must exist for an acquisition to use the LPTA source selection process and certain types of requirements that will regularly benefit from the use of tradeoff source selection procedures.”

The new rule could significantly impact bid protest litigation by improving the viability of pre-award bid protests challenging the use of LPTA procedures. More specifically, DFARS 215.101-2-70 now identifies certain criteria and factors that a contracting officer must follow, effectively providing the analytical framework to support a pre-award bid protest.

Contractors should look out for potential misuse of LPTA procurements as contracting officers attempt to navigate and implement the new rule. Offerors that have a reason to believe a DOD agency is improperly using an LPTA source selection process should consider challenging the terms of the solicitation as a pre-award bid protest at the GAO or U.S. Court of Federal Claims. The contracting officer’s requirement to document the justification for LPTA procurements will prove to be a valuable piece of evidence for contractors who choose to pursue such pre-award protests.

The full effect of DFARS 215.101-2-70 will only become clear with time. However, one thing is certain: DOD agencies will be forced to think carefully before using LPTA source selection procedures.