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You are here: Home / Government Contracting News / DoD is better defining what lowest price means in contracts

April 18, 2016 By AMK

DoD is better defining what lowest price means in contracts

The Defense Department is implementing a major change to the way it awards contracts to companies.
Better Buying Power (BBP) is based on the principle that continuous improvement is the best approach to improving the performance of the defense acquisition enterprise.
Better Buying Power (BBP) is based on the principle that continuous improvement is the best approach to improving the performance of the defense acquisition enterprise.

An April 1, 2016 memo from Claire Grady,  DoD’s director of defense procurement and acquisition policy lessens the onus on source selection officials to justify paying more for their requirements than just lowest cost technically acceptable (LPTA). It also adds some transparency to how the department prices its requirements.

The policy change is part of the Better Buying Power acquisition reforms, which stated the LPTA requirements sometimes ended up costing DoD more money in the long run. A 2013 Market Connections and Centurion Research Solutions study found 65 percent of contractors and 43 percent of government workers thought LPTA hurt long term value for short term savings. Some critics said DoD places too much emphasis on LPTA contracts.

DoD now will try to make clearer the worth of delivering a capability above “technically acceptable” or the minimum requirement when awarding contracts.

Keep reading this article at: http://federalnewsradio.com/defense/2016/04/dod-tweaks-lpta-methods-save-money-help-industry/

See the April 1, 2016 memo from Claire Grady,  DoD’s Director of Defense Procurement and Acquisition Policy, here: http://www.acq.osd.mil/dpap/policy/policyvault/USA004370-14-DPAP.pdf

Filed Under: Government Contracting News Tagged With: Better Buying Power, DoD, fair and reasonable price, lowest price technically acceptable, LPTA, price analysis, technically acceptable

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