Whether it is higher long-term costs and sacrificed value, or talent challenges and limited flexibility, industry has long recognized the consequences of misapplying lowest-price technically acceptable (LPTA) source selection criteria. 

For too long and for too many reasons, the government has used LPTA to purchase goods and services without adequate consideration of the complexity of the needs and the range of available solutions. Whether it was tightening federal budgets, fear of a bid protest, or a lack of understanding of the value that the contracting community can provide, federal agencies misused LPTA for acquisitions that should not have been done on the cheap. 

At PSC, we represent companies that provide complex, technical solutions. Using LPTA criteria for the services that our members provide—where higher-level technical capabilities and innovation are often sought, and where the contracting requirements are often difficult to accurately define—is particularly ill-advised. So, PSC got to work to ensure that LPTA was used only when appropriate and led a multi-year campaign to end its misuse for services contracts.   

Since beginning this effort over half a decade ago, PSC has successfully worked to prohibit federal agencies from using LPTA unless certain criteria are met, and as a result, agencies are now required to avoid using LPTA predominantly for the acquisition of most knowledge-based professional services. 

How we did it: 
 
PSC’s advocacy work reflects our membership—we work to demonstrate the value of the contractor community government-wide and improve acquisition outcomes at all federal agencies. Many PSC initiatives, however, start with legislation that impacts defense contractors before we can build out to the civilian agencies. This is in recognition that DoD is the largest buyer, but also accounts for Congressional or agency dynamics.

In this case, a March 4, 2015 Department of Defense memo laying out how and when contracting officers should use LPTA triggered PSC advocacy campaign. 

On the Hill: 

After the memo was issued, PSC began working with Members of Congress to codify similar language for the Department’s services contracts. PSC supported the Promoting Value Based Defense Procurement Act when it was introduced in the House and Senate and worked to tack it onto the FY17 National Defense Authorization Act (NDAA). At the time, PSC praised the legislation stating in part that it would “avoid an overreliance on LPTA that hinders DoD’s ability to maintain a best-in-class competitive edge.” The language was retained in the final conference report as Section 813. 

While the Department was at the time the worst offender, industry began seeing LPTA use at civilian agencies growing quickly. Particularly concerning, for IT—a category of services where requirements are harder to define and innovation is necessary—the number of LPTA procurements grew only 19% for DOD compared to 222% for civilian agencies over a five-year period. 

Building on our success in working with Congress to restrict LPTA at DoD, we moved to the civilian agencies and worked with Congress on a Promoting Value Based Procurement Act, this time government-wide (H.R. 3019). This legislation—which passed the House Oversight Committee before being included in the FY19 NDAA—imposed similar restrictions across the government, providing Congressional intent and direction to agencies to prioritize value and innovation in the contracting process.

At the Agencies: 

After twin legislative successes, PSC turned to shaping implementation guidance and prodding the government towards releasing the new rules. Without the regulations that direct contracting officers to account for these new restrictions, full implementation would not be realized. And the administration had already missed the statutorily imposed deadlines to issue both rules. 

PSC, on occasion with our partners in the Council of Defense and Space Industry Associations, responded to the proposed regulations with a number of recommendations for improvement and continued to stress the need for final regulations.  

In a November 20, 2018 letter to the Department of Defense, PSC’s President and CEO David Berteau stated: “As the GAO report notes from conversations with a DPC official: ‘until the DFARS is updated, DOD contracting officials are not required to consider the Section 813 criteria.’ For statutory requirements that are nearly two years old, this should be, and is, unacceptable.”  

Shortly after PSC’s letter was sent to the Department, final DFARS rules impacting defense procurements were released. In welcoming this action, Berteau stated further: “the federal government should act expeditiously to put the final nail in the LPTA coffin by issuing the government-wide regulations.”

While much delayed, on January 14, 2021, the FAR Council issued these regulations—finally imposing the LPTA restrictions for all contracts government-wide.  

These new regulations are critical. Contracting officers will now have the tools to promote value and be smarter buyers, and the direction and incentive to use them. Rather than push experience and capability levels downward and introduce cost pressures that could impair successful program performance, federal agencies will now have the flexibility necessary to seek and obtain innovative solutions, better outcomes and ultimately the best value on behalf of taxpayers.

Is the final nail in the coffin for LPTA? 

Did this final rule end LPTA as we know it? While the rule may have ended the legislative and regulatory campaign, the contractor community must be vigilant to ensure these restrictions are being accurately applied. PSC is turning now to monitor enforcement. While upgrades to FPDS will help provide visibility into compliance, PSC needs your input. If you are seeing LPTA used for complex services contracts, please reach out to policy@pscouncil.org.  
 

This article was published in the Winter 2021 edition of PSC's Service Contractor Magazine.