Over the past few years, we’ve seen an erosion of the DoD’s ability to issue solicitations on a lowest-priced technically-acceptable (LPTA) basis. In a new rule effective today, the FAR restricts all agencies—including civilian agencies—from issuing LPTA procurements.
Let’s take a look.
Before we get too far into the weeds, let’s discuss the two main methods by which an agency issues contracts: LPTA and best value. Under an LPTA procurement, the government prioritizes an offeror’s low price—if an offeror submits the lowest price, it will win the award so long as it submits a minimally-compliant solution. A best value procurement, on the other hand, allows the government to award a contract to a higher-priced offeror if that offeror provides technical advantages over its lower-priced competitors.
We’ve seen the government increasingly use best value tradeoff procedures. This should continue because the FAR now restricts the government’s ability to use LPTA procedures.
Under the updated version of FAR 15.101-2, the government can only use LPTA if the following six requirements are met:
- The agency can comprehensively and clearly describe the minimum requirements in terms of performance objectives, measures, and standards that will be used to determine the acceptability of offerors;
- The agency would realize no, or minimal, value from a proposal that exceeds the minimum technical or performance requirements;
- The agency believes the technical proposals 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 agency 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 to the agency;
- The agency determined that the lowest price reflects the total cost, including operation and support, of the product(s) or services being acquired; and
- The contracting offeror documents the contract file describing the circumstances that justify the use of the lowest price technically acceptable source selection process.
If any of these requirements are not met, the agency should use a best value tradeoff to award the contract.
Additionally, the rule identifies acquisitions that agencies should, to the maximum extent practicable, avoid using LPTA procedures:
- Contracts for information technology services (including cybersecurity), audit-related services, healthcare-related services and records, and telecommunications devices and services;
- Contracts seeking personal protective equipment; and
- Contracts for knowledge-based training or logistics services, including in Iraq and Afghanistan.
In short, the new rule significantly restricts the government to use LPTA procedures.
This should benefit small business contractors—in my experience, small businesses have less flexibility to bottom-out their prices in pursuit of an acquisition and instead focus on technical benefits. Keep this in mind if a procurement is issued as LPTA: it could be possible to challenge that designation through a pre-bid protest.
If you have any questions about this new FAR rule, please reach out.