January 15, 2021
On January 14, 2021, the FAR Council issued a final rule that changed the source selection process by which federal civilian agencies can use lowest price technically acceptable (“LPTA”) procurements. Contractors should take note because the rule implements additional criteria for the use of the LPTA source selection process, which some members of the contracting community have characterized as a de facto prohibition on LPTA.
Because LPTA resides on the best value continuum, this source selection tool has been subject criticism from perceptions that agencies have misused it for complex acquisitions or by not setting the minimum technically acceptable requirements high enough. For example, if an agency fails to define sufficiently what is “technically acceptable,” the agency may end up procuring an item that is not completely acceptable. The new rule implements restrictions imposed by Congress to address the perceived problems with LPTA procurement.
Specifically, the FAR Council acted in response to section 880 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115–232, 41 U.S.C. 3701 Note). Section 880 directs agencies to consider six preliminary criteria before selecting LPTA for procurement, including verifications that the agency (1) can “clearly describe the minimum requirements” of the procurement; (2) “would realize no, or minimal, value from a contract proposal exceeding the minimum technical or performance requirements;” and (3) “believes the technical proposals will require no, or minimal subjective judgement” for award. The rule codifies these criteria and highlights that services for information technology, cybersecurity, health care, and telecommunications and “other knowledge-based professional services” should not be procured through LPTA “to the maximum extent possible.”
The rule follows a DFARS rule promulgated in 2019 that implemented near identical pre-procurement considerations and disincentives. See 84 Fed. Reg. 50,785 (Sep. 26, 2019). Unlike the 2019 DFARS rule, however, the 2021 FAR rule does not address LPTA within Federal Supply Schedule (“FSS”) procurements. GSA specified that it “will separately address, outside of this rule, the applicability of section 880 to the GSA FSS program.”
For contractors, there are a few immediate impacts of this rule. Contractors can expect fewer LPTA procurements going forward, as the rule’s criteria disincentives the use of LPTA procurement. And when an agency decides to use an LPTA procurement, contractors should not be surprised if that decision is challenged in a pre-award protest. Finally, the carve-out for FSS procurements may provide a window of opportunity for FSS contractors, who may see increased orders as COs seek swift procurement of items in a shift away from LPTAs. Contractors should track GSA’s rulemaking and to see how GSA’s treatment of section 880 materializes
The new rule takes effect on February 16, 2021.