Tradeoffs between price and non-cost factors allow  DOD to accept other than the lowest priced proposal. The guidance also states that such situations may include  acquisitions for well-defined, commercial, or non-complex products or  services and where risk of unsuccessful contract performance is minimal,  and when it has been determined there would be no need or value to pay  more for higher performance. Section 813 of the fiscal year 2017 NDAA required that DOD revise the  DFARS to require that LPTA procedures only be used in situations when  the following six criteria are met. The contracting officer has included a justification for the use of LPTA  procedures in the contract file; and  6. In 2014, we found that DOD had increased its use of LPTA procedures  for new contracts with obligations over $25 million—using LPTA source  selection procedures to award an estimated 36 percent of new fiscal year  2013 contracts compared to 26 percent in fiscal year 2009—and that  officials’ decisions on which source selection method would be used was  generally rooted in knowledge about the requirements and contractors. We did not make  recommendations to DOD in this report. DOD Used LPTA Procedures Infrequently for Contracts Valued at $10 Million or More for Information Technology or Support Services

The Army, Navy, and Air Force rarely used LPTA source selection  procedures for IT and support services contracts valued at $10 million or  more that were awarded in the first half of fiscal year 2017. Of these 781  contracts, 133 contracts were awarded for IT and support services. Table 1 provides information on the 7 contracts we reviewed that were  awarded in the first half of fiscal year 2017 that used LPTA source  selection procedures. Factors DOD Officials Considered When Determining to Use LPTA Procedures

		DOD Officials Considered Several Factors, Including the Nature of the Requirement, When Determining to Use LPTA Procedures

Contracting officials cited a number of factors that were considered when  determining to use LPTA procedures in the 7 selected contracts we  reviewed. For all of the contracts, officials determined that the  government would not receive a benefit for paying more than the lowest  price. For these contracts, contracting officials also stated that LPTA  procedures were used, in part, because the requirements were well- defined, non-complex, or reoccurring. The Air Force awarded a contract for centralized mail sorting services  in Germany. For example, the Army received 12 offers which ranged from  $800,177 to $46,680,003. The Navy awarded a contract to perform commercially available  monthly telephone maintenance, which includes preventive and  remedial maintenance on a specific brand of phone systems that  Navy locations in California use. None of the officials for our selected contracts had confirmed that the  lowest price offered reflected full life-cycle costs, which is one of the  criteria that Section 813 requires DOD to include among the revisions  to the DFARS. As previously noted, DOD is currently developing the revisions to the  DFARS that are contemplated by Section 813. DOD had no comments on the  draft report.
Why GAO Did This Study

DOD obligated about $300 billion through contracts for goods and services in fiscal year 2016. When awarding a contract competitively, DOD may use the LPTA source selection process to select the lowest-priced offer that is technically acceptable. In contrast, DOD may use the trade-off source selection process to award a higher-priced contract to a firm if the firm's offer provides greater benefit and it is worth paying the additional cost. The National Defense Authorization Act for Fiscal Year 2017 calls on DOD to avoid using the LPTA process for information technology, cybersecurity, and other knowledge-based professional support services.
The Act also included a provision for GAO to report on DOD's use of LPTA procedures for contracts valued at more than $10 million. This report assesses the (1) extent to which DOD used LPTA procedures for certain services, and (2) factors that contracting officials considered when deciding to use LPTA procedures.
GAO reviewed data from the Federal Procurement Data System-Next Generation to identify 781 contracts valued at $10 million or above awarded by the Army, Navy, and Air Force in the first half of fiscal year 2017, the most recent period for which data were available. GAO then selected 133 of these contracts for information technology and support services, which include services reflected in the Act. GAO identified that 9 contracts used LPTA procedures and reviewed 7 of these, including interviewing officials and reviewing contract documents.
DOD had no comments on the draft report.

What GAO Found

During the first half of fiscal year 2017, the Army, Navy, and Air Force rarely used lowest price technically acceptable (LPTA) source selection procedures when awarding contracts valued at $10 million or more for the types of services identified by the National Defense Authorization Act, such as information technology services. Department of Defense (DOD) guidance states that LPTA procedures are typically for requirements that are well-defined, commercial, or non-complex products or services with a minimal risk of unsuccessful contract performance. The figure shows the military departments' limited use of LPTA procedures for contracts for selected services.
For the 7 contracts that GAO reviewed, contracting officials determined that the government would not receive a benefit for paying more than the lowest price. Contracting officials also stated that LPTA was used, in part, because the requirements were well-defined, non-complex, or reoccurring. For example, the Navy used LPTA procedures to award a contract for commercially available monthly telephone maintenance services. In addition, the Air Force used LPTA procedures to award a contract for mail sorting and delivery. Section 813 of the fiscal year 2017 National Defense Authorization Act requires DOD to amend its regulations to require contracting officers to consider specific criteria when deciding to use LPTA procedures. DOD has not yet revised its regulations to implement Section 813. Nevertheless, for the 7 contracts GAO reviewed, contracting officials' considerations when choosing to use LPTA procedures were often consistent with most of these new criteria. DOD officials are currently developing the revisions to the Defense Federal Acquisition Regulation Supplement that are contemplated by Section 813.