DoD Issues Final Rule Restricting Use of LPTA Source Selection Procedures
Today, the Department of Defense ("DoD") issued a final rule amending the Defense Federal Acquisition Regulation Supplement ("DFARS") to implement portions of the FY2017 and FY2018 National Defense Authorization Act ("NDAA"), which provide limitations and prohibitions on DoD's use of lowest price technically acceptable ("LPTA") source selection process.
Effective Date: October 1, 2019
Quick Observations
The intent of this final rule is not to completely prohibit the use of LPTA.
Intent of the rule 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 final rule covers required sources of supplies (DFARS Part 208), commercial items (DFARS Part 212), simplified acquisition (DFARS Part 213), contracting by negotiation (DFARS Part 215), ordering (DFARS 216.505), reverse auction (DFARS 217.78), major system acquisition (DFARS Part 234) and service contracting (DFARS Part 237).
DoD will publish supplemental guidance in DFARS Procedures, Guidance, and Information ("PGI") to assist contracting officers.
DFARS 215.101-2-70
When the final rule takes effect, the following limitations and prohibitions shall apply when considering LPTA source selection procedures. In other words, the rule provides that LPTA "shall only be used when":
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 (See PGI 215.101-2-70(a)(1)(vi) for assistance with evaluating whether a requirement satisfies this limitation);
The contract file contains a determination that the lowest price reflects full life-cycle costs (as defined at FAR 7.101) of the product(s) or service(s) being acquired (see PGI 215.101-2-70(a)(1)(vii) for information on obtaining this determination); and
The contracting officer documents the contract file describing the circumstances justifying the use of the lowest price technically acceptable source selection process.
In addition, the final rule also provides that contracting officers "shall avoid, to the maximum extent practicable" using LPTA source selection where the procurement is "predominantly for the acquisition 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.
The final rule also provides that contracting officers "shall not use the lowest price technically acceptable source selection process":
To procure 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;
To acquire engineering and manufacturing development for a major defense acquisition program for which budgetary authority is requested beginning in fiscal year 2019; and
To procure auditing contracts.
Takeaway
Once this final rule takes effect, DoD's ability to use LPTA source selection procedures will be greatly limited. Indeed, it appears that contracting officers must meet all eight conditions under DFARS 215.101-2-70 for an LPTA procurement to move forward. [1] As a result, it is possible that DoD will encounter a new wave of pre-award bid protests challenging the use of LPTA source selection procedures.
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[1] Interestingly, if there was any doubt as to whether all eight conditions must be met for LPTA source selection to be utilized, DoD could have provided clarity but it declined to do so.
Notably, one commenter suggested the final rule creates more documentation requirements because contracting officers would be required to provide an "analysis of the all the requirements" (i.e., eight conditions) to justify the use of LPTA. DoD responded indirectly, noting that the final rule "implements statutory language that requires a contracting officer document the contract file with the circumstances justifying the use of the LPTA source selection process[,]" and does not "specify a format or method to be used to meet this statutory requirement." Moreover, DoD's response also notes that the format used to justify LPTA is "left to the discretion of each Department or agency[,]" and that acquisition personnel must consider the "unique circumstances of a requirement and determine the method that will result in the best value to DoD."
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