Monday, March 7, 2016

Revisiting LPTA in the context of national security

Even though I'm no longer in proposals, I still follow LPTA discussions. If you don't recognize the acronym, it stands for "Lowest Price, Technically Acceptable." In an LPTA procurement, each vendor has to meet a minimum set of technical criteria. It doesn't matter if you exceed it - you just have to meet it. As long as you meet that baseline, the bid is competed on price.

As you can imagine, LPTA procurements work great for things like toilet paper. They don't work so good for things like jet aircraft.

Back in 2013, I shared a Bob Lohfeld story about one LPTA procurement that went awry. A particular bid came up for a recompete, which was a good thing in the agency's eyes, since the incumbent wasn't doing so great. The incumbent submitted a bid, as did its competitors. But when it came time to evaluate the bids, the evaluators were forced to conclude that the incumbent's bid was technically acceptable, since the incumbent had (marginally) been doing the work. However, the incumbent still feared that it would lose, so it bid a much lower price than the price it bid originally. The net result, according to Lohfeld:

The incumbent contractor, fearing that they would lose on price, took a dive on price and bid lower wages—probably making a bad situation worse.

At the time, neither Lohfeld nor I went into the details of why reducing your labor costs on an existing contract could "make a bad situation worse." Fast forward to February 2016, when Erik Kleinsmith wrote the following:

[C]ontractors who have people working on a LPTA-bid program coming up for re-compete have to bid with real people while competitors can bid fiction. As long as competitors can prove that they will provide [people] who will meet the baseline qualifications, it is easier for them to bid much lower and worry about the costs of actually hiring qualified people later. Incumbents are therefore faced with three choices:
•Bid their current people (and most likely lose)
•Bid their current people but cut their salaries (often drastically) and risk losing them, or
•Replace their current people and risk losing the relationships they’ve built with the government.

Options 2 and 3 require a certain degree of cut-throat mentality, as they entail telling current employees that their past efforts have been so great that they’ve resulted in a severe pay cut or outright replacement.

And of course the fun is just beginning during the bid process. It gets even more fun after the bid has been "won":

Unlike programs where turnover happens because of the government selecting better quality people, the normal chaos that results in contract turnover is not a one-time event for LPTAs. It continues throughout the life of the program. Many incumbent employees who do not have immediate job prospects elsewhere will stay on – but only as long as it takes for them to find a better paying job elsewhere. New analysts starting on the program soon learn that they are worth more working somewhere else and also tend to leave in fairly short order. If there is a certification, clearance, or some other skillset acquired on the new job, they will wait until they gain it and then take their more marketable resume somewhere else in the community.

Oh, and one thing that I neglected to mention - Kleinsmith was writing this in the context of intelligence analysts. Now I have no idea how many national security-type bids are issued as LPTA bids, but Kleinsmith does an effective job of painting a scary picture. Namely - if you're going to bid LPTA for intelligence work, then you might as well hand Snowden's documents, Clinton's email server, and everything else over to ISIS right now.

OK, he didn't go that far. But he did say this:

When considering an intelligence career, ask specific questions from your hiring managers and don’t take “It’s a best-value program” for an answer. Ask them about the average turnover rate and talk to other analysts currently on task if possible. Also ask them if there are specific resume submission or experience requirements for your position. If not, be warned. Eventually you will run into an LPTA-bid program, but hopefully from a third-person and not a first-person perspective.
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