Regulatory Change Intended to Discourage the Use of LPTA Procurement is Coming

The government contracting industry has spoken—and Congress listened.  In the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (2019 NDAA) Congress passed significant limitations on the use of Lowest-Priced, Technically-Acceptable (LPTA) source selection criteria, presumably intending  to curtail this widely-used but generally unpopular procurement vehicle.  Section 880 of the 2019 NDAA includes the following policy statement: “It shall be the policy of the United States Government to avoid using lowest priced technically acceptable source selection criteria in circumstances that would deny the Government the benefits of cost and technical tradeoffs in the source selection process.”

So what does that mean? Fortunately Congress clarified the limited set of circumstances in which an agency may use LPTA.  An agency may use LPTA when:

  • 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;
  • 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;
  • 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 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;
  • the contracting officer has included a justification for the use of a lowest price technically acceptable evaluation methodology in the contract file; and
  • the executive agency has determined that the lowest price reflects full life-cycle costs, including for operations and support.

If these requirements for the use of LPTA seem subjective, that’s because they are.  Chances are that if an agency really wants to use LPTA, it still will be able to.  However, given the extra work involved, including the requirement of a written memorandum justifying the use of LPTA, the new requirements will likely present a significant roadblock to the use of LPTA.  That may be sufficient to keep most agencies from using it very much.

In addition, Congress set forth several categories of contracts in which the use of LPTA will be avoided “to the maximum extent practicable.”  These include contracts for the procurement of:

  • 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;
  • personal protective equipment; or
  • knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.

These specific prohibitions on the use of LPTA should be sufficient to prevent the use of LPTA contracts in the vast and growing world of IT and cybersecurity contracting.

So when will the new regulations come into effect?  The FAR Council’s Spring Semiannual Regulatory Agenda scheduled the proposed rule for publication in July 2019, but it has yet to appear on the Federal Register.  Sometimes it can take years for regulations required by the NDAA to proceed through the rulemaking process.  But given the pressure from the contracting community to reduce the use of LPTA as a contracting vehicle, we expect that the proposed rule is likely to appear sometime this year.  Stay tuned for further updates as the rulemaking process continues, and contact us if you have any questions about the likely implications for your business!

About the Authors

Michael A. Richard

Associate

Michael is an attorney in Obermayer’s Government Contracting Department, where he excels at getting clients to the settlement table. Michael’s tenacity is truly a force to be reckoned with. Over the past...

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Maria L. Panichelli

Partner

Maria is a partner and the Chair of the Government Contracting department.   She focuses her practice exclusively on federal government contracting and procurement, guiding her clients throughout the entire lifecycle of their...

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