September 4, 2018
Defense Primer: Lowest Price Technically Acceptable Contracts
Background
Accelerated Time Frames
When procuring goods or services, the Department of
In certain circumstances, LPTA may offer a more
Defense (DOD) generally seeks to obtain the best value for
streamlined and simplified approach to procuring certain
the government by encouraging full and open competition
goods and services. Firms bidding for a contract know the
among potential suppliers, as required by the 1984
specific thresholds and can sometimes submit proposals
Competition in Contracting Act (P.L. 98-369, also known
more quickly. Award decisions require little subjective
as CICA). Full and open competition occurs when all
analysis, potentially accelerating decision making.
eligible prospective contractors are permitted to submit bids
Fewer Bid Protests
or proposals; CICA generally mandates that, whenever
Contracts awarded on the basis of lowest price are
practical, DOD must obtain full and open competition
considered easier to defend against bid protests. In 2015,
through the use of competitive contracting procedures.
then Under Secretary of Defense for Acquisition,
Technology, and Logistics Frank Kendall acknowledged
Getting the Best Value for DOD
this benefit, stating that “there is a side benefit to
Part 15.101 of the Federal Acquisition Regulation (FAR)
monetizing best value criteria in that the objective source-
establishes two primary types of competitive source
selection criteria are harder to contest successfully.”
selection procedures intended to get the best overall value
However, he cautioned that contracts should not be
for DOD: 1) the tradeoff process and 2) the lowest price
designed around limiting the likelihood of bid protests.
technically acceptable (LPTA) process.
When is LPTA Appropriate?
The tradeoff process is generally used when cost is only one
LPTA is considered best suited for situations in which:
factor to be considered when awarding a contract. For
 contract requirements are well defined, non-complex,
example, DOD may award contracts based on non-cost
or reoccurring;
factors such as quality and performance; a firm’s technical
 there is a low risk for poor performance;
or managerial expertise; or past performance. Each of these
 there is little development work to be completed; and
criterion may be evaluated on a sliding or pass/fail basis.
 there is no appreciable value to DOD for performance
LPTA is appropriate to use when price is the determining
above the technical requirements.
factor in awarding a contract. Under LPTA, for all
As such, LPTA is more likely to be effective when the
proposals deemed to be technically acceptable and therefore
requirements are clearly and comprehensively spelled out.
meeting DOD’s specified minimum performance
Section 813 of the FY2017 National Defense Authorization
requirements, price is the determining factor in awarding a
Act (NDAA) (P.L. 114-328; see also 10 U.S.C. 2305 note)
contract, with no consideration given to any other factors.
mandated that DOD only use LPTA if the following six
Past performance does not need to be an evaluation factor
conditions are met:
when it is not relevant for the particular acquisition.
1. minimum contract requirements in terms
of performance objectives, measures, and
In recent years, DOD has faced criticism for using LPTA
standards are clearly identified;
instead of a tradeoff process in certain acquisitions.
Congress has expressed concern regarding the perceived
2. there is little or no value in exceeding the
inappropriate use of LPTA and has passed legislation
minimum requirements set forth in the
limiting the use of LPTA by DOD.
proposal request;
3. there is little or no subjective evaluation
Benefits to Using LPTA
as to the desirability of one proposal
versus another;
A number of analysts have identified specific benefits that
LPTA may provide DOD, including potential cost benefits,
4. there is a high degree of confidence that a
accelerated acquisition time frames, and fewer bid protests.
review of technical proposals other than
the lowest bidder would not result in the
Cost Benefits
identification of factors that could provide
Under LPTA, all factors other than cost or price are
value or benefit to DOD;
evaluated on an acceptable or unacceptable basis without
5. a justification is included for the use of an
consideration given to higher levels of quality. Observers
LPTA evaluation methodology in the
note that, in circumstances where there is no appreciable
contract file; and
benefit to DOD for exceeding its stated minimum technical
6. DOD has determined that the lowest price
requirements, LPTA can save money.
reflects full life-cycle costs, including
operations and support.
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Defense Primer: Lowest Price Technically Acceptable Contracts
FY2016 NDAA (P.L. 114-92)
Case Study: Air Force Use of LPTA
Section 894: Stated that it is the sense of Congress that
In 2017, the Government Accountability Office (GAO)
before using LPTA for the procurement of audit or audit
reviewed a $21.5 million contract that the Air Force awarded
readiness services, DOD evaluate companies based
using an LPTA process for centralized mail sorting services in
primarily on their qualifications, past performance,
Germany. The plan for the acquisition stated that the LPTA
expertise, and other relevant factors.
source selection process was used because the requirements
for the service were well defined and non-complex. The risk
FY2017 NDAA (P.L. 114-328)
and consequences of poor performance were considered low.
Section 813: Required DOD to avoid using LPTA when
It was also determined that there was no appreciable value for
doing so would deny the benefits of cost and technical
performance exceeding the minimum stated requirements for
tradeoffs in the source selection process and when acquiring
mail sorting.
information technology services, personal protective
equipment, and knowledge-based services.
DOD Use of LPTA
Section 814: Prohibited DOD from using LPTA when
In 2010, DOD introduced its Better Buying Power
procuring personal protective equipment, where the level of
initiative, which was aimed at cutting acquisition costs by
quality or failure of the item could result in combat
$100 billion over a five-year period. Under this policy,
casualties.
LPTA was viewed as a source selection procedure that
might help DOD reduce expenditures.
Section 892: Prohibited DOD from using LPTA for
acquisition of audit services.
In 2014, GAO found that several contracting and program
officials in DOD gave more attention to LPTA due to
FY2018 NDAA (P.L. 115-91)
declining budgets and DOD initiatives such as Better
Section 822: Specified that LPTA may only be used when
Buying Power. According to GAO, from FY2009 to
there is no, or minimal prospect for future technological
FY2013, DOD’s use of LPTA grew from 26% to 36% of all
advantage or for items that are expendable, non-technical,
solicitations. Over this period, use of the tradeoff process
or expected to have short shelf lives.
decreased from 69% to 58%. Similarly, a Bloomberg
analysis found that there was an appreciable increase in the
Section 832: Prohibited the use of LPTA for the
use of LPTA by DOD between 2008 and 2017. Observers
engineering and manufacturing development of Major
have drawn attention to the perceived correlation between
Defense Acquisition Programs. The Senate Armed Services
increased use of LTPA and budget constraints.
Committee report noted that, while DOD did not classify
the source selection process used to acquire the Northrop
Critics of how LPTA have been used argue that by not
Grumman B-21 Raider as an LPTA process, the acquisition
providing industry with a business incentive to offer higher
procedure used resembled an LPTA process, not a trade-off
performance, there is no motivation for industry to develop
process. The committee expressed concerns over the high
new, improved, or innovative products and services in
degree of expected development work and the risk of
circumstances where DOD could benefit from better
contractor performance.
contractor performance. The use of LPTA conditions the
government market to offer less-desirable goods and
Additional Provisions: Prohibited the use of LPTA for
services because the incentive structure encourages firms to
selected software development programs (Section 874),
reduce their prices as long as their product remains above
aviation critical safety items Section 882), and audit
the threshold of technical acceptability. Further, critics
services (Section 1002).
argue that LPTA contracts are not always the most effective
and efficient approach to ensuring quality and performance
FY2019 NDAA (P.L. 115-232)
in the long term; these analysts argue that the use of LPTA
Section 880 Prohibited government agencies from using
may sacrifice long-term value for short-term cost savings.
LPTA when doing so would deny the benefits of cost and
technical tradeoffs in the source selection process.
Congress has also expressed concern regarding the misuse
Specifically, use of LPTA was prohibited when acquiring
of LPTA for source selection. As noted in the FY2016
personal protective equipment and certain knowledge based
NDAA Conference Report (H.Rept. 114-270), Congress
services (e.g., information technology and cybersecurity).
has been “concerned that an overarching bias towards
reducing prices paid by [DOD] to the exclusion of other
Moshe Schwartz, Specialist in Defense Acquisition
factors could result in DOD buying low cost products that
Brendan K. McConnaughay, Research Associate
have the potential to negatively impact the safety of U.S.
military personnel.”
IF10968
Recent Legislation
Below are summaries of select provisions from the
FY2016-FY2019 NDAAs relating to the use of LPTA.

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Defense Primer: Lowest Price Technically Acceptable Contracts



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https://crsreports.congress.gov | IF10968 · VERSION 2 · NEW

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