Georgia Tech Procurement Assistance Center

LPTA contracts stifle innovations, contracting officials say

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Lowest Price, Technically Acceptable (LPTA) contracts might save the government some money, but they deter innovation, a panel of government contracting officials said Monday (May 19, 2014).

“I don’t know a senior leader in government that thinks LPTA is the best,” said Tiffany Hixson, regional commissioner for the General Services Administration. “Contracting and innovation is about risk management.”

But with shrinking budgets, agencies are looking to lower their costs and LPTA contracts do just that, said Robert Coen, acting director of the National Institutes of Health Information Technology Acquisition and Assessment Center.

“There’s way too much LPTA going on,” Coen said at the May 19 ACT-IAC Management of Change Conference. “LPTA should be used for commodity buys, not innovations.”

Keep reading this article at: http://www.fiercegovernment.com/story/lpta-contracts-stifle-innovations-contracting-officials-say/2014-05-20

GAO: Price revisions allowed in final price revisions unless expressly limited

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According to the GAO, an offeror may revise its price as part of a final proposal revision, unless the procuring agency expressly limits the scope of proposal revisions.

In a recent bid protest decision, the GAO held that the agency properly accepted the awardee’s revised price because agency had not limited the scope of discussions so as to exclude price revisions.

The GAO’s decision in Medical Receivables Solution, B-409358 (Mar. 19, 2014) involved a Army 8(a) set-aside solicitation for medical records coding services.  Award was to be made to the lowest-priced, technically acceptable (LPTA) offeror.

After evaluating initial proposals, the Army established a competitive range of six offerors.  The Army then conducted written discussions with offerors concerning the specific weaknesses and deficiencies in their proposals.  The Army’s discussion letter asked each offeror to address its identified weaknesses and deficiencies and submit a final proposal revision, highlighting all changes.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/gao-price-revisions-allowed-in-fprs-unless-expressly-limited/ 

Vendors see writing on the wall when it comes to low price acquisitions

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Vendors are on edge and growing more nervous about the state of the federal  acquisition environment. Blame sequestration. Blame the government shutdown. But  the real culprit is LPTA — lowest price, technically acceptable — an  approach to evaluating procurements that is changing the federal acquisition  landscape.

And all signs point to agencies continuing to use this approach in the coming  years to buy goods and services, thus forcing federal contractors to have no  choice but to adjust.

“We have to accept lowest price may just be best value for the government  customer,” said Lisa Dezzutti, president and CEO of Market Connections, during a  briefing to industry on new research and a new survey of how LPTA is impacting the  government market. “We have to pursue new and lower cost business models.”

Lowest price technically acceptable is not really a new concept when it comes to  acquisition evaluations, but it has been gaining favor among agencies,  specifically the Defense Department over the last few years. Through its Better Buying initiative, DoD has  offered LPTA as one of several approaches to improve how they buy goods and  services.

Now it seems civilian agencies are following suit. Centurion Research Solutions  analyzed more than $27 billion in procurements and found the Veterans Affairs  Department is the biggest user of LPTA among non-DoD agencies.

Within DoD, the Army, Air Force and Navy use this concept the most.

Keep reading this article at: http://www.federalnewsradio.com/?nid=130&sid=3491099&pid=0&page=1

Is the government starting to hate LPTA too?

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I was surprised (and relieved) to learn that government proposal evaluators are pushing back on the use of lowest price, technically acceptable (LPTA) evaluation criteria—and for good reason. They are now learning that this evaluation criteria can limit their ability to exercise reasonable judgment in the evaluation process and may result in contracts awarded to companies that are clearly inferior and have less qualified offerings compared to others in the competition.

Here are two instances where the use of LPTA evaluation criteria backfired on the government decision-makers:

  1. Superior value versus price
  2. Past performance and performance risk

Keep reading this article at: http://washingtontechnology.com/Articles/2013/06/07/Insights-Lohfeld-LPTA-shortcomings.aspx?Page=1 

How to win contracts when lowest price is the highest measure

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The lowest price technically acceptable (LPTA) acquisition strategy, which focuses on price over value, has become the dominant approach that agencies are applying to federal contracting. The accelerated transition to this strategy has been fueled by sequestration and the growing need for government to do business at a reduced cost. Contractors are still learning how to operate in this new environment, but many fear that the emphasis on lower cost labor will reduce the expertise of the work force and result in lower levels of effort.

The LPTA strategy is a step down from best value, admits Tony Constable, president, CAI/SISCo, a company that provides business development support services to industry. In a best value contract, the winning proposal is chosen based on an aggregate view about the perceived value, and that value is tempered somewhat by price. Even if the underlying contract switches from one contractor to another one, the new company could still retain much of the trained labor force. In an LPTA contract, the price—not the solution—is the primary decision criterion, and this affects labor pricing much more so than it does product pricing.

Being an incumbent contractor is the worst place to be on an LPTA bid, because the needed flexibility in labor prices requires huge salary and benefit cuts. Constable calls it the race to the bottom as it relates to labor, but he also acknowledges that the LPTA strategy is reasonable to a point depending on the work.

Keep reading this article at: http://www.afcea.org/content/?q=node/11104

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