trade off | The Contracting Education Academy

February 25, 2021 By cs

New final rule limits use of LPTA

Businesses and consumers make complex trade-off decisions every day when buying and selling supplies and services.

Sometimes it makes sense to pay more or charge more for a supply or service when quality improvements, added features, or other considerations justify the price. Other times, paying more or adding features provides no meaningful benefit so we opt for the least expensive item that satisfies our needs.

The federal government uses this same framework, dubbed the “best value continuum,” in negotiated acquisitions. On one end of this continuum is a full trade-off, where non-price factors, e.g., quality and past performance, take precedence over price. On the opposite end of the continuum is the lowest price technically acceptable (LPTA) process. Under LPTA, the government determines its minimum acceptable technical requirements and then seeks to award a contract to the lowest priced offeror who meets the minimum requirements.

Federal agencies have been criticized for overusing the LPTA source selection process, based on the concerns that LPTA procedures chill innovation and hamstring agencies who could benefit from trading cost or price considerations for technically superior capabilities. The business community also criticized government reliance on LPTA to purchase safety-related items; such items should not be purchased based on minimum standards.

In response to these criticisms, Congress included Section 880 in the Fiscal Year (FY) 19 National Defense Authorization Act (NDAA), stating: “[i]t shall be the policy of the United States Government to avoid using lowest price technically acceptable source selection criteria in circumstances that would deny the government the benefits of cost and technical tradeoffs in the source selection process.”

Keep reading this article at: https://www.mondaq.com/unitedstates/government-contracts-procurement-ppp/1034008/you-get-what-you-pay-for-new-final-rule-limits-use-of-lpta

See Jan. 14, 2021 Final Rule affecting LPTA at: https://www.govinfo.gov/content/pkg/FR-2021-01-14/pdf/2020-29087.pdf

July 30, 2020 By cs

Verizon loses protest of use of LPTA

The Government Accountability Office has denied Verizon’s protest of the use of lowest price, technically acceptable (LPTA) source selection for telecommunications services under the $50 billion Enterprise Infrastructure Solutions (EIS) telecom and network modernization contract.

Verizon specifically protested requests for proposals by the Defense Information Systems Agency (DISA), arguing that the reliance on LPTA violated the 2017 National Defense Authorization Act, as well as the Defense Federal Acquisition Regulation Supplement, which both require the Department of Defense to try to avoid such source selection when acquiring information technology.

The telecom company suggested DISA instead use best value tradeoff (BVTO) source selection, which would see the task order awarded to the contractor offering the greatest value to the government — not the lowest-cost or highest technically rated offeror.

GAO rejected that idea.

Keep reading this article at: https://www.fedscoop.com/verizon-lpta-eis-protest-denied/

November 15, 2018 By AMK

GAO reiterates that agencies must meaningfully consider price in ‘best value’ tradeoffs

In three related bid protest decisions made public in the last few weeks, the Government Accountability Office (GAO) reaffirmed the principle that agencies must meaningfully consider price when making best value tradeoff decisions.

GAO sustained the protests, stressing that merely paying lip service to price while selecting a more expensive, higher-rated offeror is not sufficient — agencies must provide a rational explanation for why they have decided to pay a premium for the awardee’s technical superiority.

In Solers, Inc., B-414672.3 et al.; Technatomy Corporation, B-414672.5; and OGSystems, LLC, B-414672.6 et al., three disappointed offerors challenged the Defense Information Systems Agency’s (DISA) award of Multiple Award Task Order contracts to 14 contractors as part of the Systems Engineering, Technology, and Innovation program.

The solicitation provided that DISA would make award on a best-value tradeoff basis considering price and four technical factors that, when combined, were significantly more important than price. The agency made award to the 14 highest rated proposals in the non-price factors, opining — without elaboration — that “the technical merit of those proposals justifies paying a price premium over lower-rated, lower-priced proposals.” Indeed, throughout the evaluation process, the agency repeatedly noted — again without elaboration — that the awardees’ proposals were worth a premium.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2018/11/hey-big-spender-gao-reiterates-that-agencies-must-meaningfully-consider-price-in-best-value-tradeoffs/

October 11, 2017 By AMK

Procurement may be trending toward value over price

The number of times federal agencies have requested lowest-price, technically acceptable (LPTA) bids in contract solicitations has shot up over the past decade, an examination of Bloomberg Government data shows.

Federal contract solicitations stating that awards will be made on the basis of LPTA source-selection procedures have steadily grown, from 920 in fiscal year 2008 to more than 12,000 in each of the past two fiscal years, according to Bloomberg Government data.

But contracting industry groups and, increasingly, members of Congress have been agitating for a best-value purchasing approach in more cases, taking into account other factors, including whether the benefits of higher-priced proposals are worth the extra cost.

This renewed priority for best-value procurements has been reflected in the fiscal 2017 and 2018 defense authorization bills in Congress, which significantly narrow the range of types of procurements in which the Defense Department can use LPTA as a guiding philosophy.

Keep reading this article at: https://about.bgov.com/blog/procurement-may-trending-toward-value-price/

December 13, 2016 By AMK

2017 NDAA restricts DoD’s use of LPTA procedures

The 2017 National Defense Authorization Act (NDAA) is full of important changes that will affect federal contracting going forward.

One of these important changes severely limits the use of lowest-price technically-acceptable (LPTA) evaluations in Department of Defense (DoD) procurements. Following the change, “best value” tradeoffs will be prioritized for DoD acquisitions. This post briefly examines when LPTA procurements will and won’t be allowed under the 2017 NDAA.

The 2017 NDAA sets a new DoD policy: To avoid using LPTA evaluations when doing so would deny DoD with the benefits of cost and technical tradeoffs.

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/2017-ndaa-restricts-dods-use-of-lpta-procedures/

Businesses and consumers make complex trade-off decisions every day when buying and selling supplies and services.

The Government Accountability Office has denied Verizon’s protest of the use of lowest price, technically acceptable (LPTA) source selection for telecommunications services under the $50 billion Enterprise Infrastructure Solutions (EIS) telecom and network modernization contract.

In three related bid protest decisions made public in the last few weeks, the Government Accountability Office (GAO) reaffirmed the principle that agencies must meaningfully consider price when making best value tradeoff decisions.

The number of times federal agencies have requested lowest-price, technically acceptable (LPTA) bids in contract solicitations has shot up over the past decade, an examination of Bloomberg Government data shows.

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