When asked what he thought about while he sat atop the Mercury-Redstone 3 rocket, waiting to be hurtled into space at a top speed of over 5,000 miles per hour, Alan Shepard famously quipped, “The fact that every part of this ship was built by the low bidder.”
Those days may be coming to an end. As Washington Technology reports, The National Defense Authorization Act of 2017 (NDAA 2017) calls for major cutbacks in the use of the Low Price Technically Acceptable (LPTA) procurement method, including a Defense Federal Acquisition Regulation Supplement (DFARS) update that would severely curtail its use.
Unlike Best Value procurements, which allow the Government to consider non-cost benefits alongside cost, LPTA procurements are based almost wholly on price. As long as a bidder is technically capable of doing the job, then it all comes down to cost. In LPTA, it does not matter if, say, Company X offers a far superior warranty and round-the-clock customer service at a moderately higher price than their competitors. If Company X is not the cheapest, they are not getting the contract.
Unsurprisingly, LPTA is hardly popular among contractors. A 2014 survey found that 89% of respondents opposed the use of LPTA, while 68% believed the method had damaged their businesses. On the Government side, the use of LPTA means that evaluators lack the ability to favor a company based on strengths, no matter how beneficial, that exceed the minimum technical requirements.
Nonetheless, in an age of tightening budgets, LPTA procurements have become increasingly widespread, accounting for the majority of DoD procurements, not to mention a considerable share of civilian agency procurements.
But analysis has shown that while LPTA saves some money in the short term, it often turns out to cost agencies more in the long run. In other words, LPTA does not actually guarantee the lowest price at all.
NDAA 2017 specifically recommends avoiding LPTA for procurements in:
- IT services
- Cybersecurity services
- Systems engineering
- Technical assistance services
- Electronic testing/audit/audit readiness services
- Other knowledge-based professional services
- Personal protective equipment
- Knowledge-based training or logistics services in contingency operations or other OCONUS operations.
While NDAA 2017 only directly affects DoD procurements, the move signals a sea change in procurement methodology—and civilian agencies may well follow suit.
The coming shift to Best Value procurement will allow contractors increased opportunity to leverage their unique strengths into increased wins. At the same time, however, Best Value proposals are almost invariably more complex and labor-intensive than their LPTA counterparts. For many contractors, especially small to medium businesses that do not maintain full proposal development departments, the move to Best Value awards may demand additional in-house resources or outside consulting expertise.
Global Services has a long history of managing both LPTA and Best Value proposals, and continuously monitors procurement developments. For the latest information, or to learn how we can assist with every aspect of proposal development, contact Global Services today.