Think of your local discount outlet store or major retail chain that offers “lowest price” merchandise. There are certain things that you probably purchase there that make a lot of sense. I can think of a few that get on the list easily – toilet paper, toothpaste, paper towels, etc. Now, think of the things you wouldn’t or couldn’t imagine buying there – makeup? suits? dresses? generic food brands? The same can be said for almost anything. Some
things you can settle for the lowest price because you know you get what you pay for and it doesn’t really matter. Other things you want to stand the test of time and be a good value for the money you spent.
Automobiles is another area where you may start to question price and value. If you buy the cheapest model available, you may be willing to sacrifice power windows and locks, cruise control, and hands-free accessories. Again, you know that you get what you pay for in the end.
There have been many conversations lately about LPTA (lowest price, technically acceptable) in government contracting. In some cases, this is probably a good fit for government purchasing – toilet paper, paper (in a paperless environment this is a high value commodity), and office-provided coffee may be among those that fit this model. What about those things that fit the mold the government THINKS they need and is the lowest price? How about a tank? Is it really such a good idea to get something that is technically acceptable (rolls on tracks, has a big gun, has armor, etc.), but lowest price (uses plastic treads, the gun is a BB gun, and the armor is tinfoil)? Maybe not.
The LPTA designation gives the contracting officer the ability to have a less cumbersome process, but clearly there is a disconnect in the acquisition of technically complex items. One of the primary disconnects is the government basically know what it wants but doesn’t have the details thought out. Talk to any experienced GovCon professional and you will get a story of the expanding nature of requirements that seemed too simple from the beginning of the award.
Considering there is an overarching desire to cut spending, LPTA could become the go-to method for acquiring anything. By trying to outline what is required without the technical expertise to back up the statement of work, there is a disconnect in the ability to cut spending in the name of technically acceptable proposals. I may be able to deliver the technically acceptable items, but who is it that is analyzing this? I would wager it may not be the end-user since this is often someone that is 3 or more people disconnected from the purchasing process.
Some items to think about:
- There may be a huge sucking sound from the government that is not related to money, but is related to technical expertise – IF there is a determination that LPTA can save money and still be considered a good value, they will need someone to determine what is “TA.”
- Know what you are getting into when you face a solicitation that states LPTA. One of the biggest issues here is differentiating what is Technically Acceptable based on your particular expertise in order to support your price. (If you can prove the other guy is not “TA” you may still win without being “LP.”
- Budget cuts = cost/price ceilings for contracting officers. Make sure you know what the customer will need and have the conversations BEFORE the award.
- Contract type can be a HUGE factor here if you get stuck with an ever expanding and broad-reaching SOW that cuts into your profit.