1). When using the  LPTA process, DOD specifies its minimum requirements in the  solicitation. The award is made based on the lowest priced,  technically acceptable proposal submitted to the government. 2. 5. A Defense Pricing and  Contracting (DPC) official stated the revisions are in process but were  delayed due to a number of reasons, including the need for the revisions  to reflect  two additional criteria that were added to Section 813 (shown as  criteria (7) and (8) in the list above) through subsequent provisions in  Section 822 of the National Defense Authorization Act for Fiscal Year  2018, and  compliance with Executive Order 13771, which calls for the reduction  and control of regulatory costs. Past GAO Reports on DOD Source Selection Process

Since 2010, we have issued three reports on DOD’s use of source  selection processes. DOD concurred and  implemented the recommendation in August 2012. In 2014, we found that DOD had increased its use of the LPTA process  for new contracts with obligations over $25 million, using the LPTA source  selection process to award an estimated 36 percent of new fiscal year  2013 contracts compared to 26 percent in fiscal year 2009. About One-Quarter of Fiscal Year 2017 DOD Contracts and Orders Valued $5 Million and Above Used the LPTA Process

Based upon the results of our generalizable sample, we estimate that  about 26 percent of contracts and orders competitively awarded by the  Army, Navy, Air Force, and DLA valued at $5 million and above in fiscal  year 2017 used the LPTA process. These four orders were  for cybersecurity services, information technology services, and  knowledge-based professional services. DOD Contracting Officials Considered Most of the Section 813 Criteria before Using the LPTA Process, but Were Confused by Some Aspects

Contracting officials stated that they generally considered five of the eight  criteria in Section 813 when awarding the 14 contracts and orders we  reviewed. Table 3 illustrates  whether contracting officials considered the Section 813 criteria when  they decided to use the LPTA process for the 14 contracts and orders we  reviewed. A DPC official stated that until  DOD regulations are updated, DOD contracting officials are not required  to consider the Section 813 criteria. Some contracting officials were uncertain how to address the other two  criteria that were generally not considered. For example, 4 of the 14  contracts and orders that we reviewed were for products. In  this regard,
Eight contracting officials did not think life-cycle costs applied to their  acquisitions and therefore they did not understand what costs they  would have considered. For example, the official stated that  the updated regulation will require written justifications for using the LPTA  process. This official, however, could not comment on whether the  revisions will provide clarification, beyond what was written in Section  813, on how to apply the two criteria that DOD contracting officials  generally found confusing. As a result, contracting officials will be at risk of not  consistently applying the criteria in Section 813. Absent additional direction, contracting  officials across DOD may not understand how to consistently apply these  criteria when using the LPTA process. Recommendations for Executive Action

We are making the following two recommendations to DOD:  The Secretary of Defense should ensure that the Director, Defense  Pricing and Contracting , addresses how contracting officials using the  LPTA process should apply the Section 813 criterion regarding  procurement for goods that are predominantly expendable in nature,  nontechnical, or have a short life expectancy or shelf life as revisions to  the DFARS are considered.
Why GAO Did This Study

When awarding a contract competitively, DOD may use the LPTA process, under which the lowest price is the determining factor when selecting an offer. Section 813, as amended, contained a provision for GAO to submit four annual reports on DOD's use of the LPTA process for contracts exceeding $5 million as well as how contracting officials considered eight specific criteria. GAO issued its first report in response to this provision in November 2017.
This second report, among other things, assesses the extent to which (1) DOD used the LPTA process in fiscal year 2017 and (2) contracting officials considered Section 813 criteria when using the LPTA process.
GAO selected a generalizable sample of 172 DOD 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.

What GAO Found

GAO estimates that about 26 percent of the Department of Defense's (DOD) contracts and orders valued $5 million and above in fiscal year 2017 were competitively awarded using the lowest price technically acceptable (LPTA) process. DOD used the LPTA process to buy such things as equipment, fuel, information technology services and construction services.
Section 813 of the National Defense Authorization Act for Fiscal Year 2017, as amended, mandated that DOD revise its regulations to require that eight criteria be considered when using the LPTA process. As of September 2018, DOD had not yet done so. Accordingly, a DOD acquisition policy official stated that contracting officers are not yet required to consider these criteria. Nevertheless, GAO found that contracting officials generally considered five of the eight criteria for the 14 contracts and orders GAO reviewed (see table).
Source: GAO analysis of Section 813, DOD source selection guidance, contract file documents and interviews with contracting officials. | GAO-19-54
A DOD official stated that the updated regulations will reflect these eight criteria, including that justifications be documented. However, the official could not comment on whether the revisions will clarify how DOD contracting officials should implement the two other criteria that were generally not considered. Some contracting officials GAO interviewed were confused about how to apply these two criteria. Four of the 14 contracting officials stated that they did not understand how to apply the criterion regarding whether purchased goods are predominantly expendable in nature, nontechnical, or have a short life expectancy or shelf life. Additionally, 8 of the 14 contracting officials stated the criterion regarding an assessment of life-cycle costs was not applicable to their acquisitions. Absent clarification on how to consider these two criteria, DOD increases the risk that its contracting officials will not consistently implement the requirements in Section 813, as amended.

What GAO Recommends

GAO recommends that DOD address, as regulations are updated, how contracting officials should apply two Section 813 criteria that were generally not considered. DOD concurred with the recommendations and plans to revise its regulations and issue additional guidance by the end of fiscal year 2019.