Pentagon hasn’t complied with 2-year-old congressional mandate on LPTA

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The Defense Department has dragged its feet in implementing a host of new measures lawmakers ordered as part of a crackdown on lowest-price, technically acceptable (LPTA) contracts.

The findings are part of an annual Government Accountability Office review of DoD’s use of LPTA source selections. In its report, released Tuesday, GAO estimated LPTA is used for about a quarter of the Pentagon’s contracts and task orders that are worth $5 million or more.

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But it also pointed out that DoD still has not issued the rules Congress ordered it to draft two years ago to ensure the department is only using the cost-conscious procurement method when appropriate.

As part of the 2017 National Defense Authorization Act, Congress — responding to longstanding industry complaints about a perceived overuse of LPTA — ordered DoD to make sure it satisfies eight separate criteria before deciding to go that route on a given contract, rather than using a “best value” method for picking the winner.

The legislation was enacted in December 2016. By September of this year, DoD still had not begun moving on the rulemaking process needed to implement the law.

Officials eventually opened a case to amend the Defense Federal Acquisition Regulation Supplement (DFARS) on Oct. 25, several weeks after GAO gave them a draft copy of the final report it issued this week. But they do not expect the final rules to go into effect until the fourth quarter of 2019.

Among the new mandates Congress issued was that when DoD contracting officers are using LPTA, they need to be able to clearly define the government’s minimum requirements. They should be sure that there’s no value in buying products or services that exceed those minimums, and be confident that DoD would be wasting its time if it delved deeply into questions about whether one vendor might be able offer a more innovative approach. That might be the case if the department is buying commodities such as natural gas or off-the-shelf computers.

DoD does not keep detailed records about how often it uses LPTA contracts, but GAO’s review of a sample of 2017 contracts and task orders found that, by and large, the department is almost always complying with those principles, even without the rule change.

But for three of the other tests Congress ordered, it’s clearly not.

Justification for LPTA required, but not given

The law also told the department it needs to provide a written justification for why it decided to use LPTA in any given contract. That happened only three times in the sample of 14 large procurements GAO examined.

In that same sample, there was only one case in which DoD was able to show that the “lowest price” it settled on included the operations and support or “lifecycle” costs for what it was buying, another requirement of the 2017 NDAA.

And in only two cases was DoD able to satisfy the law’s requirement that it only use LPTA for goods that are “predominantly expendable in nature, nontechnical, or have a short life expectancy or shelf life.”

At least some of the contracting officers GAO interviewed said that determination is a tough call, especially without DoD-level rules that might provide some more guidance.

“Specifically, a Marine Corps contracting official who purchased general use computers stated it was unclear if a computer that will be replaced every 5 years would be considered to have a short shelf life,” auditors wrote. “Additionally, an Air Force contracting official who purchased Blackberry licenses stated that it was unclear if this criterion would apply to such licenses, and if it did, whether a one-year license would be considered a short-shelf life. As a result, this contracting official stated he would not know how to consider this criterion in similar acquisitions.”

Read more of the DoD Reporter’s Notebook.

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