LPTA Evaluations of Government Contracts
In a discussion with some associates a week ago I was surprised to hear they were not aware of the LPTA practice that is becoming more popular in evaluating government contract bids. First, let’s look at what LPTA is. This is the government’s acronym for Lowest Price Technically Acceptable practice of evaluating contract bids. This is described in the Federal Acquisition Regulations paragraph 15.101-2 as a source selection process to be used when “best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price”. Confused? Yea, I must admit that the wording here leaves a little to be desired. If you read further in the FAR paragraph here it also says “…past performance need not be an evaluation factor in lowest price technically acceptable source selections.” Wow, really? I read a story about a contractor that was having difficulty filling their obligations under a contract and had even had several cure letters written during the contract. When the contract went out for re-bid, the incumbent was able to qualify as “technically acceptable” and thus lowered their price to get the award of the new contract. Clearly this is not in the government’s best interest as they already knew of problems with this supplier and, with the lowering of their price, I’m sure further issues are bound to crop up.
So what is the issue with LPTA. The real issue is that with the current budget issues in Washington (including the effects of sequestration), all agencies are looking to cut costs however they can. This is why there is an increase in the number of LPTA contracts and the number is forecast to continue to increase for the next couple years. It means that the government will be buying more and more items and services at the lowest price. Now I don’t think that anyone will argue that if you buy a commodity at the lowest price, which is just smart business. When these types of evaluation criteria creep into other types of procurements, the level of quality or the value provided to the government suffers. Some studies have already been conducted (Deltek-Centurion study) that indicates less qualified contractors are winning LPTA contracts. They are meeting the bare minimum of qualifications but the value to the government is debatable. This is like settling for the lowest price tires on your car. They may not last very long, and they could have blowouts that are not covered by warranties, they could cause vibrations at highway speeds due to imbalance but they will allow the car to roll down the road. In other words, LPTA type contracts in these instances will drive the procurement to lower levels. Rather than striving to achieve an ‘A’ in school, we will be satisfied with a ‘D’, it is the lowest acceptable passing grade.
There are even some instances where LPTA is used as the criteria and the evaluation process looks first at the lowest price and then evaluates to see if it is technically acceptable. If it is, the procurement process is done, saving the procurement officer a lot of work. This process as opposed to first sorting the bids for technical acceptance and then picking the lowest price. As the government tries to cut budgets further, I suspect the process will tend toward the lowest effort on the part of the procurement agency and thus the lowest price bid will always get the first look.As a government contractor, you should be diligent in reviewing the solicitation to see if the evaluation will be LPTA or Best Value. If it is LPTA, you know what you have to do. This is a cutthroat market meaning you must research the competition and learn as much as you can from the customer about what the “bare minimum” technically acceptable level is. You should only provide to that minimum (strive for a ‘D’ in this case).