GAO: Lowest Price, Technically Acceptable Contract Criteria Remain Fuzzy

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The Defense Department has not yet instituted new congressionally mandated changes to the criteria for lowest price, technically acceptable contracts, a Government Accountability Office report released Nov. 13 found.

Acquisition officials can choose to award contracts based solely on the lowest bid when there was a competition and when they meet all the minimum technical requirements. About a quarter of contracts worth more than $5 million the Army, Navy, Air Force and Defense Logistics Agency awarded in fiscal year 2017 used the process, GAO found.

Congress in the National Defense Authorization Act of 2017 revised the regulations to increase the number of criteria that must be met from five to eight. The department has yet to update these guidelines, GAO found in the report, “DoD Should Clarify Criteria for Using Lowest Price Technically Acceptable Process.”

LPTA contracts have been controversial in certain sectors such as information technology, where vendors assert that past performance and a company’s qualifications for doing the work should be taken into account, as is the case in traditional contracts, a practice also known as “best value.”

“Contracting officials have broad discretion in the selection of the evaluation criteria that will be used in an acquisition,” the report noted.

However, GAO found that the services were issuing few LPTA info-tech contracts as they were following guidance to avoid using the process in such circumstances. Only nine LPTA info-tech contracts out of the 133 it examined were worth more than $10 million in 2017.

Meanwhile, an official told the government watchdog that the new guidelines will be updated by the end of fiscal year 2019, however, other contracting officers interviewed expressed confusion on how to interpret the new criteria.

The first of the three new criteria is clear: a written justification for the use of the LPTA must be included in the contract file. However, the final two are left open for interpretation, officials told GAO.

The two controversial criteria are: for procurement of goods, the goods being purchased are predominantly expendable in nature, nontechnical, or have a short life expectancy or shelf life; and the lowest price reflects full life-cycle costs, including for operations and support.

Four of 14 contracting officials interviewed said they did not understand the “expendable in nature” criteria and eight of 14 said lifecycle costs were not applicable to their acquisitions, the report stated.

For example, one of the 14 contracting officials interviewed said he didn’t know whether the general purpose computers he was buying to be used for five years would fall under the “short shelf life” criterium.

“Absent clarification on how to consider these two criteria, DoD increases the risk that its contracting officials will not consistently implement the requirements … as amended,” the report said.

GAO recommended that the Defense Department’s director of defense pricing and contracting should clarify how to apply the short life expectancy criteria and the full lifecycle costs criteria. The Defense Department agreed with the report’s findings and said the criteria will be clarified by the end of fiscal year 2019.

Topics: Contracting, Acquisition, Defense Department