Government Contracts & Investigations

Some Tradeoff Is Better than None—and Enough to Avoid the Prohibition against LPTA

By | November 19, 2019

When the FY2017 National Defense Authorization Act (NDAA) was enacted, the prohibition in Section 813(c) against the use of lowest price technically acceptable (LPTA) source selection criteria seemed fairly cut and dry. As time passes and procuring agencies adopt new evaluation schemes, however, the parameters of the prohibition are being tested. The recent Government Accountability Office (GAO) decision in Inserso Corporation, B-417791, B-417791.3 (November 4, 2019) is a case in point.

The matter involved the terms of a Request for Quotations (RFQ) issued by the Department of the Air Force for information technology (IT) and cybersecurity services. Under the RFQ, quotations were to be evaluated using technical acceptability, past performance, and price factors. The RFQ provided that the agency would first rank quotations according to price, from lowest to highest, then evaluate the five lowest-priced quotations as either technically acceptable or unacceptable. Only technically acceptable quotations would proceed to be rated under the past performance factor and a performance confidence assessment rating would be assigned to each. Then the agency would make an award decision based upon a price/past performance best value trade-off. Only quotes deemed to be technically acceptable would be eligible for award.

Inserso Corporation protested the RFQ, asserting that the agency was using lowest-priced, technically acceptable (LPTA) award criteria in violation of Section 813(c) of the FY 2017 NDAA, which states that, “To the maximum extent practicable, the use of [LPTA] source selection criteria shall be avoided in the case of a procurement that is predominately for the acquisition of [among other things] information technology services, cybersecurity services, . . . or other knowledge-based professional services.” According to Inserso, the agency would use LPTA criteria in the solicitation because the RFQ fails to provide for a tradeoff between price and technical factors. Inserso interprets the RFQ evaluation criteria to require an agency—in procurements for IT services—to affirmatively use a tradeoff between price and technical factors as the basis for award and not eliminate offers without making a tradeoff between technical factors and price. In other words, ranking offerors by price and evaluating the five lowest-priced offerors for technical acceptability, as the agency planned to do here, should be deemed to be an improper use of LPTA criteria under Inserso’s approach.

The Air Force countered that its solicitation does not violate Section 813(c) because it does not utilize lowest-priced, technically acceptable source selection criteria (as defined in FAR 15.101-2) as the basis for award—and because it is performing a best-value tradeoff, but that tradeoff is between price and past performance instead of price and technical factors.

In response to Inserso’s multiple supporting citations and arguments, the GAO found Inserso’s interpretation of Section 813 reasonable. However, although there was no dispute that the Air Force was conducting the procurement using technical acceptability and price as elements in a price versus past performance tradeoff, the GAO still concluded that the agency did not violate Section 813(c) of the FY 2017 NDAA. The GAO’s analysis continues the established precedent to afford the agency broad discretion so long as its interpretation is reasonable and based on a permissible construction of the statute. Where, as here, an agency’s statutory interpretation is found reasonable, the fact that there are alternative interpretations of the statute is irrelevant, even if these alternative interpretations are also reasonable.

The GAO noted that the protester had not identified anything in Section 813 or in regulations that specifically preclude the RFQ’s selection criteria. As a result, it held that the RFQ’s evaluation scheme, which uses a price/past performance tradeoff as the basis of source selection, does not violate procurement law. Going forward, offerors should expect to see more creative uses of evaluation criteria by agencies—and to have less opportunity to challenge them as violating Section 813 of the FY2017 NDAA.

Contact Eric Whytsell for more information.