LPTA Out, Fixed Price Contracts In
The National Defense Authorization Act for Fiscal Year 2017 (FY17 NDAA), signed into law by President Obama on December 23, includes limitations on a low price evaluation methodology and a preference for fixed price contracts that could have a significant impact on the way the Department of Defense (DoD) procures goods and services in the coming years. The FY17 NDAA also featured changes to the task order protest jurisdiction, which we outlined in this blog post.
The DoD’s use of Lowest Price Technically Acceptable (LPTA) evaluation methodology, which requires award to the lowest-price offeror that meets the minimum requirements, has historically been a source of criticism from industry and government alike, particularly when used for the procurement of complex goods and services. Simply put, the lowest price does not necessarily translate to quality and innovation, and can result in sub-optimal procurement decisions. DoD noted the need for restrictions on the use of LPTA in a memorandum issued in 2015 and the rescission and reissue of the DoD Source Selection Procedures in April 2016. Although DoD policy has been moving towards more limited use of the LPTA evaluation methodology, Sec. 813 of the NDAA now requires a limitation on the use of LPTA be included in the Defense Federal Acquisition Regulation Supplement (DFARS).