As previously discussed on this blog, the National Defense Authorization Act for Fiscal Year 2017 and the NDAA for Fiscal Year 2018 imposed new limitations on when the Department of Defense can use Lowest Price Technically Acceptable source selection methods.  Just last month, the Department of Defense issued a final rule amending the Defense Federal Acquisition Regulation Supplement to implement those provisions.  Now, in Inserso Corp., B-417791, B-417791.3, Nov. 4, 2019, GAO has weighed in on what counts as LPTA for purposes of those restrictions.  This decision may indicate a potentially significant limitation on the reach of the NDAA provisions, new DFARS rule, and proposed FAR rule.

In Inserso, the protester argued that the 2017 NDAA restricted not only DoD’s use of an LPTA source selection process, but also the use of (what the protestor labeled) LPTA criteria within the evaluation process.  Specifically, the protester challenged the fact that, under the RFQ, the agency would (1) “first rank quotations according to price, from lowest to highest”; (2) then “evaluate the five lowest-priced quotations as either technically acceptable or unacceptable” (while “reserving the right to evaluate additional quotations”); (3) then “evaluate only technically acceptable quotations under the past performance factor”; and (4) award the task order to the offeror “considered to be the Best Value based upon a price/past performance trade-off” (alteration omitted).  According to the protester, the 2017 NDAA required the agency to conduct a tradeoff between price and technical factors — rather than relegating the technical factor to a pass/fail gating criterion.

The agency, by contrast, took the position that the 2017 NDAA prohibited the use of LPTA criteria only “as the basis for award.”  The agency pointed to the discussion of LPTA “Source Selection Process” in FAR 15.101-2, and asserted that a tradeoff between price and past performance would not fall within the FAR’s description of an LPTA process.  Accordingly, the agency argued that as long as the source selection culminated in a tradeoff between price and past performance, that did not count as LPTA for purposes of the 2017 NDAA — even if the technical factor was used as a pass/fail gating criterion.

GAO sided with the agency, on the ground that the agency was entitled to Chevron deference:  “Although Inserso’s interpretation of the statute may be considered reasonable, we find the agency’s interpretation of [the 2017 NDAA] is also reasonable.”  Thus, because the protester could not identify “anything in [the 2017 NDAA] or in regulation that specifically precludes the RFQ’s selection criteria, which uses a price/past performance tradeoff as the basis of source selection, [GAO] conclude[d] the RFQ’s evaluation scheme does not violate procurement law.”

Inserso marks a potentially significant limitation on the new statutory and regulatory provisions restricting agencies’ use of LPTA source selection methods.  The reach and boundaries of GAO’s decision remain to be seen. Stay tuned for further developments.