GAO Dings DOD for failing to employ criteria mandated for LPTA use

Industry and Congress have long criticized the Department of Defense’s use of Lowest Price, Technically Acceptable (LPTA) procurement practices, explaining that one literally gets what one pays for. If a buyer purchases a product or complex service based on lowest price then it should come as no surprise when that product fails or if the provided service turns out to be of lower quality than anticipated. Congress has even attempted to legislate limits to DOD’s use of LPTA processes, including Section 813 of the National Defense Authorization Act for Fiscal Year 2017. Section 813 mandated that DOD consider eight criteria before relying on LPTA for a procurement. Now the Government Accountability Office (GAO) has dinged DOD for failing to clarify why it uses LPTA for certain procurements.

For a recently published report titled DOD Should Clarify Criteria for Using Lowest Price Technically Acceptable Process the GAO selected a sample of “172 contracts and orders valued at $5 million and above that were competitively awarded in fiscal year 2017. GAO verified that 46 of these contracts and orders used the LPTA process by reviewing solicitations. GAO selected 14 contracts and orders from the 46 based on the most frequently purchased products and services, reviewed documents, and interviewed officials to determine if the Section 813 criteria were considered.”

The GAO found that DOD “used the LPTA process to buy … equipment, fuel, information technology services and construction services,” and out of the 14 contracts and orders reviewed Defense “contracting officials generally considered five of the eight criteria” outlined in the FY 2017 NDAA. The criteria not considered by DOD contracting officials included: 1) providing a written justification for the use of the LPTA process in the contract file, 2) the goods being purchased were predominantly expendable in nature, non-technical, or had a short life expectancy or shelf life (i.e., the goods in question were not expendable, were often technical, and had long-life expectancies!), and 3) that the lowest price reflected full life-cycle costs, including operations and support.

In short, the GAO found that DOD continues to use LPTA processes in precisely the risky ways that Congress and industry have warned about in the past.

GAO generalized the results of its survey, concluding that in FY 2017 “about 26 percent of contracts and orders competitively awarded by the Army, Navy, Air Force, and DLA valued at $5 million and above used the LPTA process.” DOD responded to the report by stating that all of the LPTA criteria mandated in the FY 2017 NDAA will be implemented in procurement regulations by the end of FY 2019. In the meantime, industry is left wondering how many future acquisitions will be inappropriately awarded on the basis of LPTA processes. This analyst has heard, for example, of LPTA being used for the purchase of nursing services! One hopes this kind of anecdote will remain an outlier.