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1 [1] (September 4, 2018)

handle is hein.crs/crsmthzzbnv0001 and id is 1 raw text is: Congressional Research Service ~Inforig the legisi ative debate since 1914 September 4, 2018 Defense Primer: Lowest Price Technically Acceptable Contracts Background When procuring goods or services, the Department of Defense (DOD) generally seeks to obtain the best value for the government by encouraging full and open competition among potential suppliers, as required by the 1984 Competition in Contracting Act (P.L. 98-369, also known as CICA). Full and open competition occurs when all eligible prospective contractors are permitted to submit bids or proposals; CICA generally mandates that, whenever practical, DOD must obtain full and open competition through the use of competitive contracting procedures. Getting the Best Value for DOD Part 15.101 of the Federal Acquisition Regulation (FAR) establishes two primary types of competitive source selection procedures intended to get the best overall value for DOD: 1) the tradeoff process and 2) the lowest price technically acceptable (LPTA) process. The tradeoff process is generally used when cost is only one factor to be considered when awarding a contract. For example, DOD may award contracts based on non-cost factors such as quality and performance; a firm's technical or managerial expertise; or past performance. Each of these criterion may be evaluated on a sliding or pass/fail basis. LPTA is appropriate to use when price is the determining factor in awarding a contract. Under LPTA, for all proposals deemed to be technically acceptable and therefore meeting DOD's specified minimum performance requirements, price is the determining factor in awarding a contract, with no consideration given to any other factors. Past performance does not need to be an evaluation factor when it is not relevant for the particular acquisition. In recent years, DOD has faced criticism for using LPTA instead of a tradeoff process in certain acquisitions. Congress has expressed concern regarding the perceived inappropriate use of LPTA and has passed legislation limiting the use of LPTA by DOD. Benefits to Using LPTA A number of analysts have identified specific benefits that LPTA may provide DOD, including potential cost benefits, accelerated acquisition time frames, and fewer bid protests. Cost Benefits Under LPTA, all factors other than cost or price are evaluated on an acceptable or unacceptable basis without consideration given to higher levels of quality. Observers note that, in circumstances where there is no appreciable benefit to DOD for exceeding its stated minimum technical requirements, LPTA can save money. Accelerated Time Frames In certain circumstances, LPTA may offer a more streamlined and simplified approach to procuring certain goods and services. Firms bidding for a contract know the specific thresholds and can sometimes submit proposals more quickly. Award decisions require little subjective analysis, potentially accelerating decision making. Fewer Bid Protests Contracts awarded on the basis of lowest price are considered easier to defend against bid protests. In 2015, then Under Secretary of Defense for Acquisition, Technology, and Logistics Frank Kendall acknowledged this benefit, stating that there is a side benefit to monetizing best value criteria in that the objective source- selection criteria are harder to contest successfully. However, he cautioned that contracts should not be designed around limiting the likelihood of bid protests. When is LPTA Appropriate? LPTA is considered best suited for situations in which: * contract requirements are well defined, non-complex, or reoccurring; * there is a low risk for poor performance; * there is little development work to be completed; and * there is no appreciable value to DOD for performance above the technical requirements. As such, LPTA is more likely to be effective when the requirements are clearly and comprehensively spelled out. Section 813 of the FY2017 National Defense Authorization Act (NDAA) (P.L. 114-328; see also 10 U.S.C. 2305 note) mandated that DOD only use LPTA if the following six conditions are met: 1. minimum contract requirements in terms of performance objectives, measures, and standards are clearly identified; 2. there is little or no value in exceeding the minimum requirements set forth in the proposal request; 3. there is little or no subjective evaluation as to the desirability of one proposal versus another; 4. there is a high degree of confidence that a review of technical proposals other than the lowest bidder would not result in the identification of factors that could provide value or benefit to DOD; 5. a justification is included for the use of an LPTA evaluation methodology in the contract file; and 6. DOD has determined that the lowest price reflects full life-cycle costs, including operations and support. www crs.gov i 7-5700

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