Thursday, January 31, 2013

When "lowest price technically acceptable" is acceptable

There are a number of ways in which a Federal government agency - or a state government agency, or a private firm - can evaluate a competitive procurement. One of these methods is referred to as "lowest price, technically acceptacle."

Last year, Bob Lohfeld was asked for his advice on how to steer a procurement officer away from using LPTA as the evaluation criteria.

The capture manager and the government program manager wanted to avoid an price shootout, but the contracting shop wouldn’t agree.

Lohfeld offered five suggestions. You can find all five of them here; I'm going to share the fifth of the five suggestions.

5. Is there a record of failed contract performance?

Can you find evidence of similar service contracts awarded using LPTA evaluation criteria where the contract was either terminated for poor performance or substantially modified to grant price relief to the lowest priced offer? There is much speculation that the inappropriate use of LPTA criteria will ultimately result in contracts with unacceptable performance. If you can document some of these instances, it will strengthen your argument to avoid the LPTA approach.

Lohfeld speaks of "speculation." Can one find documented evidence that LPTA leads to failed contract performance?

No. Perhaps it does at times, but doesn't at other times. It all depends upon what is being procured, as this article from Ray Bjorklund at Deltek notes.

For routine and non-complex services, products and product integration and maintenance, LPTA is frequently one of the best methods for choosing a contractor, largely because LPTA adds useful decision-making dimensions beyond price. However, for complex services or new services that cannot be well defined, LPTA is rarely a suitable source selection method.

Bjorklund gives an example:

LPTA applied to a contract for a brain trauma study may not be the best choice. On the other hand, selection of a landscape maintenance contractor can be expedited with an LPTA source selection method.

Of course, now all of the low-cost brain trauma study outfits will refuse to buy Deltek's services...
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