Federal contractors have been struggling with the shift away from best-value contracts to a wider use of the Lowest Price, Technically Acceptable (LPTA)-type contracts. The increased use of the LPTA contract has increased dramatically, as budgets have been cut in all federal agencies and the professional contracts management workforce numbers have dwindled.
Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall recently issued a memorandum which states that LPTA “has a clear, but limited, place in the source selection best value continuum” and narrowly defines when LPTA is appropriate for DOD procurements.
This memo signals a shift away from the LPTA source selection process. It states that the following four situations are appropriate for LPTA buys.
- The requirements are well-defined.
- The risk of unsuccessful contract performance is minimal.
- Price is a significant factor in determining the award.
- There is neither value, need or willingness to pay for higher performance.
In a commentary about this memo, Bob Lohfeld, CEO and general manager of Edgewater-based Lohfeld Consulting Group, quoted Kendall with an example of an appropriate use of LPTA: “Lawn mowing services are a good example of the type of services where LPTA would be appropriate. In lawn mowing, the requirements are well defined, the risk of unsuccessful performance is minimal, additional value is not gained from higher performance than specified, and price is appropriately a significant factor in the selection.”
However, Lohfeld argues that “This kind of procurement is the antithesis of where we have seen DOD use LPTA as its source selection process. Hopefully, this example will make it unambiguously clear that LPTA and technical service, and solution bids, don’t mix.”
As more firms experience reduced revenues from losing recompeted contracts, the ongoing use of the LPTA contracts will come under more intense scrutiny, especially those demanding a high level of experience and sophisticated knowledge and where the risk of poor performance is too great.
Download a copy of Kendall’s memo titled, “Appropriate Use of Lowest Priced, Technically Acceptable Source Selection Process and Contract Type” at www.targetgov.com/kendall.