New DoD Rule Limits Use of Lowest Price Technically Acceptable Procurements

On September 26, 2019, the U.S. Department of Defense (DoD) issued a final rule limiting the use of lowest price technically acceptable (LPTA) contract awards. LPTA awards have long been the bane of contractors and the government, as they encourage a race-to-the-bottom that frequently disqualifies higher quality, better value, and more innovative proposals. The LPTA rule, which became effective on October 1, is generally a welcome development.

The final rule – DFARS 215.101-2-70 – addresses LPTA use in three ways. First, the rule limits the use of LPTA to procurements that meet the following conditions:

• Minimum requirements can be described clearly and comprehensively and expressed;
• No, or minimal, value will be realized from a proposal that exceeds the minimum technical or performance requirements;
• 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;
• 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;
• Contract file contains a determination that the lowest price reflects full life-cycle costs of the product(s) or service(s) being acquired; and
• Contracting officer documents the contract file describing the circumstances justifying the use of the lowest price technically acceptable source selection process.

Second, the rule discourages contracting officers from using LPTA “to the maximum extent practicable” when acquiring the following goods and services:
 

• IT 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 (PPE) (that is not prohibited below); 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.

Third, the rule prohibits contracting officers from making LPTA awards for the following goods and services:

• Items designated by the requiring activity as PPE 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; or
• Auditing contracts.

Given the final rule’s presumption (and in some cases prohibition) against LPTA awards, contractors should now be skeptical anytime they see a DoD LPTA solicitation. When faced with a potentially improper LPTA solicitation, we recommend seeking legal counsel to determine the best path forward.  

For additional information, please contact Christian Robertson. Christian is an associate in Ice Miller’s Government Contracts and Litigation Practices.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.