Updated December 15, 2021
Defense Primer: Lowest Price Technically Acceptable Contracts
Background
given to higher levels of quality. Observers note that, in
When procuring goods or services, the Department of
circumstances where there is no appreciable benefit to DOD
Defense (DOD) generally seeks to obtain the best value for
for exceeding its stated minimum technical requirements,
the government by encouraging full and open competition,
the use of LPTA can potentially result in savings.
as required by the 1984 Competition in Contracting Act
Accelerated Time Frames
(P.L. 98-369, also known as CICA). Full and open
competition occurs when all eligible prospective contractors
In certain circumstances, LPTA may offer a more
are permitted to submit bids or proposals in response to a
streamlined and simplified approach to procuring certain
proposed contract action.
goods and services. Firms bidding for a contract know the
specific thresholds and can sometimes submit proposals
more quickly. Award decisions require little subjective
Best value, when used in the context of government
analysis, potentially accelerating decision-making.
procurement, refers to the expected outcome of an
acquisition that, in the government's estimation, provides
Fewer Bid Protests
the greatest overall benefit in response to the requirement
Contracts awarded on the basis of lowest price are
(Federal Acquisition Regulation 2.101).
considered easier to defend against bid protests. In 2015,
then Under Secretary of Defense for Acquisition,
Getting the Best Value for DOD
Technology, and Logistics Frank Kendall acknowledged
this benefit, stating that “objective source-selection criteria
CICA generally mandates that, whenever practical, DOD
are harder to contest successfully.” However, he cautioned
must obtain full and open competition through the use of
that source-selection criteria and acquisition strategies
competitive contracting procedures. Part 15.101 of the
should not be designed around limiting the likelihood of bid
Federal Acquisition Regulation (FAR) establishes two
protests.
primary types of competitive source selection procedures
intended to obtain the best overall value for DOD: 1) the
When is LPTA Appropriate?
tradeoff process and 2) the lowest price technically
LPTA is considered best suited for situations in which:
acceptable (LPTA) process. The tradeoff process is
generally used when cost is only one factor to be considered
contract requirements are well defined, simple, or reoccurring;
in awarding a contract. For example, DOD may award
there is a low risk for poor performance;
contracts based on non-cost factors such as quality and
there is little development work to be completed; and
performance; a firm’s technical or managerial expertise; or
there is no appreciable value to DOD for performance
past performance. Each of these criteria may be evaluated
exceeding the technical requirements.
on a sliding or pass/fail basis. The use of LPTA is
appropriate when price is the determining factor in
As such, LPTA is more likely to be effective when contract
awarding a contract. Under LPTA, for all proposals deemed
requirements are clearly and comprehensively spelled out.
to be technically acceptable and therefore meeting DOD’s
Recent changes to statute and regulation have set forth
specified minimum performance requirements, price is the
specific requirements for the use of LPTA, as well as
determining factor in awarding a contract, with no
circumstances where DOD should generally avoid the use
consideration given to any other factors. Past performance
of LPTA. Section 813 of the FY2017 National Defense
does not need to be an evaluation factor when it is not
Authorization Act (NDAA) (as amended; see 10 U.S.C.
relevant for the particular acquisition.
§2305 note) mandates that DOD can only use LPTA if the
following conditions are met:
In recent years, DOD has faced criticism for using LPTA
instead of a tradeoff process in certain acquisitions.
minimum contract requirements in terms of performance
Congress has expressed concern regarding the perceived
objectives, measures, and standards are clearly identified;
inappropriate use of LPTA and has passed legislation
there is little or no value in exceeding the minimum technical
limiting DOD’s use of LPTA.
or performance requirements set forth in the proposal request;
there is little or no subjective evaluation as to the desirability
Benefits to Using LPTA
of one proposal versus another;
there is a high degree of confidence that a review of technical
A number of analysts have identified specific benefits that
proposals other than the lowest bidder would not result in the
LPTA may provide DOD, including potential cost benefits,
identification of factors that could provide value or benefit to
accelerated acquisition time frames, and fewer bid protests.
DOD;
Cost Benefits
little or no additional innovation or future technological
advantage will be achieved by using a different source
Under LPTA, all factors other than price are evaluated on
selection process;
an acceptable or unacceptable basis without consideration
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Defense Primer: Lowest Price Technically Acceptable Contracts
any goods being obtained are generally expendable in nature,
Recent Congressional Activity
are nontechnical, or have a short life expectancy or shelf life;
Congress has also expressed concern regarding the misuse
a justification is included for the use of an LPTA evaluation
of LPTA for source selection. As noted in the FY2016
methodology in the contract file; and
NDAA Conference Report (H.Rept. 114-270), Congress
DOD has determined that the lowest price reflects full life-
has been “concerned that an overarching bias towards
cycle costs, including operations and support.
reducing prices paid by [DOD] to the exclusion of other
factors could result in DOD buying low cost products that
DOD is also required to avoid, to the maximum extent
have the potential to negatively impact the safety of U.S.
practical, the use of LPTA for procurements predominantly
military personnel.”
intended to acquire knowledge-based professional services
(such as cybersecurity services); personal protective
Recent Legislation
equipment; or knowledge-based training or logistics
services in support of contingency operations or other
FY2017 NDAA (P.L. 114-328)
operations outside of the United States. Other specific
Section 813: Required DOD to avoid using LPTA when
prohibitions on the use of LPTA have been enacted in
doing so would deny the benefits of cost and technical
subsequent NDAAs.
tradeoffs in the source selection process and when
acquiring information technology services, personal
Case Study: Air Force Use of LPTA
protective equipment, and knowledge-based services.
In 2017, the Government Accountability Office (GAO)
Section 814: Prohibited DOD from using LPTA when
reviewed a $21.5 million Air Force contract for centralized
procuring personal protective equipment, where the
mail sorting services in Germany. The Air Force stated that
level of quality or failure of the item could result in
the LPTA source selection process was used as the
combat casualties.
requirements for the service were well defined and
Section 892: Prohibited DOD from using LPTA for
noncomplex. The risk and consequences of poor performance
acquisition of audit services.
were considered low, and there was no appreciable value for
FY2018 NDAA (P.L. 115-91)
performance exceeding the minimum stated requirements.
Section 822: Specified that LPTA may only be used
when there is no, or minimal prospect for future
DOD Use of LPTA
technological advantage or for items that are
In 2010, DOD introduced its Better Buying Power (BBP)
expendable, nontechnical, or expected to have short
initiative, which was aimed at cutting acquisition costs by
shelf lives.
$100 billion over a five-year period. Under this policy,
Section 832: Prohibited the use of LPTA for the
LPTA was viewed as a source selection procedure that
engineering and manufacturing development of Major
might help DOD reduce expenditures. In 2014, GAO found
Defense Acquisition Programs. The Senate Armed
that LPTA was highly attractive to DOD contracting and
Services Committee report noted that, while DOD did
program officials due in part to declining budgets and
not classify the source selection process used to acquire
initiatives such as BBP. According to GAO, from FY2009
the Northrop Grumman B-21 Raider as an LPTA
to FY2013, DOD’s use of LPTA for new, competitively
process, the acquisition procedure used resembled an
awarded contracts grew from 26% to 36%. Similarly, a
LPTA process, not a trade-off process. The committee
Bloomberg analysis found that there was an appreciable
expressed concerns in part over the high degree of
increase in DOD’s use of LPTA between 2008 and 2017.
expected development work.
Observers have drawn attention to the perceived correlation
Additional Provisions: Prohibited the use of LPTA for
between increased use of LTPA and budget constraints.
selected software development programs (Section 874),
aviation critical safety items Section 882), and audit
Critics of DOD’s use of LPTA argue that by not providing
services (Section 1002).
industry with a business incentive to offer better
performance, there is no motivation for industry to develop
FY2019 NDAA (P.L. 115-232)
new, improved, or innovative products and services in
Section 880: Prohibited government agencies from using
circumstances where DOD could benefit from better
LPTA when doing so would deny the benefits of cost and
contractor performance. The use of LPTA conditions the
technical tradeoffs in the source selection process.
government market to offer potentially less desirable goods
Specifically, use of LPTA was prohibited when acquiring
and services because the incentive structure encourages
personal protective equipment and certain knowledge based
firms to reduce their prices as long as their product remains
services (e.g., cybersecurity).
above the threshold of technical acceptability. Further,
critics argue that LPTA contracts are not always the most
FY2020 NDAA (P.L. 116-92)
effective and efficient approach to ensuring quality and
Section 806: Required revision to the Federal Procurement
performance in the long term; these analysts argue that the
Data System (FPDS, or any successor system) to facilitate
use of LPTA may sacrifice long-term value for short-term
the collection of complete, timely, and reliable data on the
savings.
source selection process, to include tracking the usage of
source selection mechanisms.
https://crsreports.congress.gov
Defense Primer: Lowest Price Technically Acceptable Contracts
Heidi M. Peters, Analyst in U.S. Defense Acquisition
Policy
IF10968
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https://crsreports.congress.gov | IF10968 · VERSION 8 · UPDATED