DoD Finalizes Restrictions on Use of LPTA Source Selection Process

Effective October 1, DoD has issued a final rule restricting the use of LPTA solicitations in certain circumstances. This rule implements statutory changes from the 2017 and 2018 NDAA that will greatly impact the use of LPTA procurements by DoD contracting officers.

If you are a loyal reader of SmallGovCon you are aware that we have been tracking these statutory changes since they were first mentioned by the 2017 NDAA.

For those who may not have been following our previous coverage of these changes, here is a quick summary. The 2017 NDAA established a new DoD policy of avoiding LPTA evaluations, when doing so would deny DoD the benefits of cost and technical tradeoffs. The 2017 NDAA limited the use of LPTA source selection based on six conditions, and suggested that, for a majority of procurements, DoD should use best-value procedures. The 2018 NDAA added two more requirements to the original six, and the echoed the 2017 NDAA in calling for limits to the use of LPTA source selection in DoD procurements. Until recently, DoD had not updated its regulations to reflect Congress’ intent to limit LPTA source selections, leaving contracting officers at DoD without detailed guidance.

DoD just issued a final rule amending the DFARS to reflect the relevant sections of the 2017 and 2018 NDAA, limiting the use of LPTA source selection procedures in DoD procurements. This final rule, once implemented, will make changes to the DFARS and the relevant regulations reflecting these changes will be found at DFARS 215.101-2-70.

The final rule issued by the DoD explains the implementation of these new regulations and attempts to clarify commenters’ concerns. There were no changes made to the proposed rule as a result of any public comments.

In general the regulations to be implemented in the DFARS will establish a preference for the use of trade-off source selection processes in procurements related to certain safety items and auditing services; prohibit the use of “reverse auctions” or LPTA source selection processes for certain supplies and services; and set specific criteria for when the LPTA source selection process should be used.

In the final rule, DoD made a point to explain that it is not the intent of these regulations to prohibit all use of the LPTA source selection process. The rule merely limits use of LPTA to situations where eight specific criteria are present. We have discussed those eight criteria, taken from the NDAA language, in a previous post. The rule cautions to avoid DoD to avoid LPTA, or prohibits use of LPTA, for certain acquisition categories.

DoD assured commenters that the DFARS Procedures, Guidance, and Information, or PGI, will be updated along with the DFARS so contracting officers have proper guidance for the interpretation of these new regulations. The PGI will also include guidance to contracting officers on documenting the contract file to demonstrate how a LPTA source selection process would effect price, and to justify the choice of LPTA as a source selection process. DoD also asserts that the updates to the PGI will negate any confusion with the terms of the new regulations.

DoD makes it clear in the final rule that these regulations limiting LPTA use apply to any acquisition that could potentially utilize the LPTA source selection process, regardless of whether the contract was for supplies or services, and will not be limited to only procurements for goods, commercial items under a specific threshold, or any other such grouping. Throughout the final rule, DoD points to the impending PGI updates as the source for any guidance, and generally argues that the terms of the regulations are meant to be applicable across many types of procurements.

DoD is charging ahead with these additional restrictions on using LPTA. Contractors can expect a decrease in DoD LPTA procurements after the regulations go into effect, and if LPTA source selection procedures are used, expect additional scrutiny. As shown in the comments on the final rule, there are disagreements with how the terms of the regulations will be interpreted, so challenges or protests revolving around these rules may appear in the future. Stay tuned to SmallGovCon for updates on the implementation, use, and interpretation of these new DoD regulations limiting LPTA usage.