AT&L chief provides guidance on appropriate use of LPTA source selection

The Department of Defense (DoD) Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) Frank Kendall distributed a memorandum to his department’s acquisition professionals on March 4, 2015, providing guidance on when to use lowest-price technically-acceptable (LPTA) contracts.

Notably, the guidance also speaks about how to apply LPTA competitions to acquisitions for professional services.

Kendall’s memo says that DoD should not use LPTA if it is willing to pay more for superior performance.

The memorandum is comprehensive in that it speaks to the types of contracts that DoD may use in LPTA procurements, including fixed-price, time and materials, and cost-plus fixed-fee contracts.

“LPTA is the appropriate source selection process to apply,” Kendall states, “only when there are well-defined requirements, the risk of unsuccessful performance is minimal, price is a significant factor in the selection, and there is neither value, need, nor willingness to pay for higher performance.”  Kendall continues: “LPTA has a clear, but limited place in the source selection ‘best value’ continuum.”

Read the full AT&L memorandum at:


6 simple fixes for the federal procurement process

As the largest buyer of goods and services in the world, our government has a rigorous procurement process in place to protect the American taxpayer, designed to facilitate helping Uncle Sam buy what he needs to perform his myriad missions efficiently, effectively, and economically. Unfortunately, the federal government fails to spend taxpayer money wisely with such frequency that newspapers and television reports are rife with examples of overspending, failed projects and bloated contracts.

Procurement goes through reforms every few decades, but the current environment could not be worse. From the Brooks Act in 1972 to the Service Acquisition Reform Act in 2003, much has been done to address the “mechanics of procurement,” but little has been done to address the human aspect of procurement, either on the government or the contractor sides. From a $10 stapler to a $1.2 billion failed technology system, our government tries to legislate fixes, but it is hard to legislate human nature.

There are things that can be done without formal change; leaders need to lead, managers must manage, and the workforce must exhibit good judgment, be honest and realistic, achieve value, and learn to manage risk. Procurement personnel need to be well trained, their workload must be better managed, and they need to possess strong problem-solving skills. Contractors need to help the federal government with its procurement issues, provide the right solutions, and be realistic about what it can do.

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Acquisition 101: When a bargain isn’t a bargain

When my wife and I purchased our first vacuum cleaner, we selected a cheap model. It met all the specs of what we needed, did a minimally acceptable job and lasted little more than a year before it died. Not learning the lesson that buying the first vacuum should have taught us, we immediately bought another cheap vacuum to replace the first one, and it died an early death about 18 months later. We finally did learn our lesson with the third vacuum and paid slightly more for a better vacuum that has lasted six years (and counting).

Much like our predicament with the rotating vacuums, federal contracting professionals are facing increasing pressure to purchase goods and services as cheaply as possible using a method commonly referred to as “lowest price/technically acceptable” (LPTA)—even if it means minimal acceptability.  This push is laudable in theory, but the reality is often higher prices and a smaller pool of quality contractors, while robbing contracting officers of any discretion to choose a solution or product that is more cost-effective in the long term.

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About the authors: Eric Crusius, a partner with Fed Nexus Law, focuses on government contracts, cybersecurity, employment law and complex litigation. Mitchell Bashur, an associate at Fed Nexus Law, also contributed to this column.

DOD asks leaders to grade RFPs earlier in acquisition cycle

The Defense Department is requiring senior officials to review major acquisitions before the program receives approval to move into the technology development phase, commonly known as Milestone A.

This change is part of the rigor brought into the military from the Better Buying Power (BBP) initiative.

“How do we ensure our investment accounts go as far as they can through addressing affordability? We are doing it through increased emphasis through systems engineering, especially before and around Milestone A,” said Katrina McFarland, the assistant secretary of Defense for acquisition.

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Pentagon ranks top suppliers to spark competition among contractors

The Defense Department’s acquisition chief on Friday (June 13, 2014) released a ranking of the top 30 supplier units within the contracting industry as part of a continuing effort to improve the government’s largest procurement operations by curbing costs and professionalizing the workforce.

Frank Kendall III, undersecretary of Defense for acquisition, technology and logistics, introduced the first rankings from a Navy Department pilot project called the Superior Supplier Incentive Program. Designed to help industry “recognize its better performers” based on past performance and evaluations by program managers, such a list is planned for all the services beginning to build incentives, Kendall told reporters. “The industry people who will respond the most will be the ones at the bottom,” he said.

Sean Stackley, assistant Navy secretary for research, development and acquisition industry, said “industry best practices include recognizing the best suppliers, which gives them an incentive to sustain superior performance.” The selections were made through a process designed to be “fair and objective and understood by the public and Congress, as well as easy to manage,” Stackley said.

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For the annual report on the performance of the Defense Acquisition System, click here.  

For DOD, trust may be the key to cost savings

In a time when defense officials are hunting everywhere for savings, a new study has found what might be the missing element that could save the Defense Department billions of dollars: Trust.

DOD’s distrust of defense contractors has led to the creation of a significant bureaucracy, according to several university researchers, who released a report in May. DOD currently spends $400 billion each year acquiring products and services from its contractors. About $100 billion of the money is spent on administrative costs, according to the study, based on interviews with 80 defense contractor executives.

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Shield acquisition workforce from budget cuts, procurement chief says

Agencies should avoid cutting their acquisition workforces to meet budget cuts in the coming year, said Joseph Jordan, the federal procurement policy chief.

The administration intends to keep growing the acquisition workforce in order to more effectively manage the government’s $500 billion annual contracting operation, said Jordan.

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Small businesses neglected in GSA procurement modernization, lawmakers fear

Just as the General Services Administration was announcing a new effort to modernize office supply purchasing schedules, a set of small business contractors were complaining to lawmakers that GSA’s changes were dealing too many vendors out of federal eligibility.

Rep. Mick Mulvaney, R-S.C.., chairman of the House Small Business Subcommittee on Contracting and Workforce, brought GSA’s top acquisition executive on Thursday to a hearing to listen to the concerns of a panel ranging from architects to office furniture vendors who feel left out from some of the agency’s recent efforts to economize on behalf of taxpayers.

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Oracle contract cancellation no big deal, experts say

The General Services Administration’s cancellation of Oracle Inc.’s Schedule 70 IT services contract was simply because the two could not reach an agreement on terms, deciding in the end to go their separate ways, experts say.

A senior GSA official said April 20 that it was not in the government’s best interest to continue to offer Oracle’s IT services though its Schedule. GSA officials would not provide further details.

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IT acquisition: Pay less now, more later

Given the current budget environment, in which even essential programs are under scrutiny, it’s only natural that agencies are pressuring their acquisition teams to put the squeeze on vendors for the best possible price. Unfortunately, they might get that price only to find out later that the joke is on them.

Experts increasingly fear that officials will develop a “lowest cost technically acceptable” attitude for their procurements. In other words, they will pick the bids that meet the minimal requirements and go for the cheapest price to demonstrate to the higher-ups that they are good stewards of the government’s money.

The result could be abysmal performance.

“Think performance is bad now? Wait,” said Jaime Gracia, president and CEO of Seville Government Consulting, a federal acquisition and program management consulting firm. “Soon, these jokers will come in to start work and they’ll be like the Three Stooges.”

In some cases, experts say, the lowest bid could actually end up costing agencies more as they eat up all the savings — and more — with make-good work.

“Suddenly, the lowest cost technically acceptable isn’t the lowest cost,” said Robert Burton, former deputy administrator at the Office of Federal Procurement Policy.

But several factors work against buying the best value, which weighs both cost and quality. One problem is timing: Investing in quality might not pay off right away, which could frustrate Obama administration officials who are eager to show that they are running the government efficiently.

Another problem is that best value is inherently subjective. Buyers must factor in the probability of success and the associated risks — both of which elude hard analysis — against any differences in cost. In contrast, when success is measured on price alone, it’s easier to set goals and measure progress against them. You can just watch that bottom line.

Those difficulties are compounded by the fact that shrinking budgets also mean acquisition officials are getting less support from contractors. In the past, contractors have often helped with market research and other important tasks that can help justify higher bids.

Dan Gordon, who recently stepped down as OFPP administrator, offers a more tempered view. There are times when the lowest cost is fine, he said. But on more complicated procurements, the best value deserves a close look, too.

He said he is confident that the federal acquisition workforce has the training and experience to navigate those choices. They know they are “entrusted with the discretion to find the way to best protect taxpayers’ dollars,” Gordon said.

But others are less optimistic. Larry Allen, president of Allen Federal Business Partners, said he believes the low-cost mentality might have already taken hold in some parts of the government, such as the Defense Department.

The Three Stooges just might be arriving with a “fleet of Yugos,” Allen said.

Data management

The government is sitting on an oil field of information that could help agencies operate better and more efficiently. If it could tap the wealth in those data reserves, it would be rich enough to move to Beverly Hills.

Managing that data in 2012 will help the government make valuable decisions that can save money and give insight into its buying habits.

Federal officials will want to know where their money is going because Office of Management and Budget officials will be asking. OMB has directed financial and acquisition officials to decrease spending — specifically spending on contracting — and it recently mandated a 15 percent decrease in contract management support services by the end of the fiscal year. Agencies will need hard data to prove that they have made the cuts.

Strategic sourcing

Officials from the Clinton, George W. Bush and Obama administrations might have disagreed on numerous policies, but they could agree on this: The federal government ought to leverage its collective buying power to get better prices on common commercial products.

Today that concept goes by the name of strategic sourcing, and agencies are beginning to see the wisdom of it. Yes, they might have to pay a fee to buy from a strategic sourcing contract, but in the end, the savings outweigh the initial cost.

As of now, the General Services Administration offers strategic sourcing contracts for printing services and for domestic delivery services, with several IT products covered by blanket purchase agreements. But the range of products available through strategic sourcing is expected to expand as interest grows.

With agencies searching under their couch cushions for loose change to put toward their shrinking budgets, strategic sourcing has the potential to catch on big.

Cuts to support services

As noted earlier, just when acquisition officials could use more help, they are likely to have a lot less of it.

In the past decade, agencies have quadrupled the amount of money they spend on management-related support functions, far outpacing the growth in overall contract spending, according to an OMB memo released late last year.

In fiscal 2010, agencies spent more than $44 billion on 12 types of support services, including IT services, acquisition planning and program management. That’s too much, OMB officials say. They will be paying close attention to agencies’ compliance with OMB’s required 15 percent reduction in spending on support services.

The process will be painful for agencies. Contracting officers will feel the pain when they’re doing the market research for solicitations, and managers will feel it when they try to get help evaluating a program only to find an empty desk where a contractor once sat. Agency employees will be doing all that work themselves.

Dialogue with industry

The Obama administration has made a lot of acquisition officials nervous with its efforts to keep dealings between agencies and companies on the up and up. But at the same time, administration officials have pushed agencies to make sure those conversations happen.

One example is the mythbusters campaign Gordon launched while at OFPP to dispel unfounded ethical concerns that are hindering government/industry dialogue. Another is GSA’s BetterBuy initiative, an effort to use Web 2.0 technology to give industry more input on planned acquisitions.

More recently, GSA has launched the Integrations Industry Community as an online venue for vendors to provide input on an upcoming governmentwide acquisition contract for IT-related professional services.

The thinking behind all those initiatives is that, now more than ever, federal agencies are in the market for new ideas — especially ones that can save them money — and contractors have innovation to spare.

One way or another, contracting officials and program managers must find a way to talk, Gordon said. He once jokingly told an apprehensive contracting officer, “Take five lawyers with you if you need to, but you’ve got to find a way to feel more comfortable talking and listening to vendors.”

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared on Jan. 20, 2012 at