On March 4, 2015, Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall issued a memorandum detailing the “limited” role that “Lowest-Price, Technically-Acceptable” (“LPTA”) source selections should play in the Department of Defense (“DOD”) acquisition process. (LPTA procurements are just as their name describes—competitions in which the Government selects the lowest-priced proposal that meets a minimum set of technical requirements.) The Kendall memorandum explains that LPTA procurements are appropriately utilized only where “there are well-defined requirements, the risk of unsuccessful contract performance is minimal, price is a significant factor for in the source selection, and there is neither value, need, nor willingness to pay for higher performance.” The Kendall memorandum warns that if overused, LPTA procurements could result in DOD “miss[ing] an opportunity to secure an innovative, cost-effective solution to meet Warfighter needs to help maintain [its] technical advantage.”

The recommended limitation on LPTA procurements should be welcome news to contractors. Such procurements have been repeatedly criticized as “races to the bottom” in which offerors have no choice but to compromise quality in favor of lower-proposed prices. (For the same reason, LPTAs are criticized as tending to favor offerors incapable of providing higher-quality goods and services.) Indeed, in encouraging DOD to avoid misuse of the LPTA model, the Kendall memorandum recognizes that where the Department “may benefit from an innovative and technically superior solution,” “a tradeoff source selection process between cost or price and non-cost factors is optimal.” To that end, and using professional services contracts as an example of a types where DOD cannot predict the required outcomes of the work required but where that work must nonetheless be of the highest quality, the memorandum endorses the use of Cost-Plus Fixed-Fee, Term Level of Effort (CPFF LOE), and to a lesser extent, Time-and-Materials contracts in order to encourage contractors to provide high quality, innovative solutions, at the best value to the Government.

In light of the Kendall memorandum, where possible during the pre-solicitation phase of an impending acquisition, contractors should engage with their DOD customers considering the use of a LPTA contracting vehicle if they believe that LPTA is not truly appropriate. In so doing, they may also be able to promote their own ability to provide unique higher-quality goods and services at competitive prices.