value | 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

January 18, 2019 By AMK

Procurement director recommends regularly talking-up department’s accomplishments

Rockland County in suburban New York City has seen a big improvement in its fiscal health. Budgets in the county (2017 population: 328,868) have been quite tight.

“When I took office, the Comptroller’s Office listed Rockland as the most fiscally stressed county in the state. But in September, New York State Comptroller Thomas DiNapoli released the 2017 Fiscal Stress Monitoring System report which showed Rockland County as now having ‘Moderate Stress,’ an incredible turn around,” says Rockland County Executive Ed Day.

The proposed 2019 Rockland County budget, which outlines $709,050,000 in planned spending, has been cut to the bone. County fiscal planners had to cut departmental budgets to deal with a $13 million budget gap. Costlier health insurance premiums, increased pay in labor contracts, higher interest payments on county bonds, increased spending to rebuild the county’s infrastructure and higher costs to pay for state-mandated programs helped contribute to the shortfall.

“We are seeing 2019 county operational budgets relatively flat. There are concerns regarding sales tax revenue, due to the tariffs and how they may affect pricing and consumer confidence,” Rockland County Director of Purchasing Paul Brennan tells Coop Solutions. Brennan is both a Certified Public Procurement Officer and a Fellow of the NIGP: The Institute for Public Procurement.

Keep reading this article at: https://www.americancityandcounty.com/2018/12/12/new-york-procurement-departments-staff-grows-despite-county-budget-cuts/

January 6, 2016 By AMK

A better idea than ‘do more with less’

Now that Congress has agreed to a two-year budget framework and passed a $1.1 trillion spending bill, the federal government finally has the opportunity for budget predictability that has eluded most agencies since 2010.

The bad news is, the pressure to cut costs is not likely to lessen much despite the long-needed budget stability. Rather than the same old “do more with less” dictum, however, there is another way to look at this push: creating value.

In practice, for most government agencies, the typical annual top-down direction is to cut back overall budgets by 5 percent or 10 percent across the board, without meaningful discrimination between high-value, high-priority activities and low-value, low-priority activities.

In the commercial sector, the creation of value, coupled with an efficient cost management process, is the result of an enterprise management focus to sustain the viability of the corporation. The government’s “spend it or lose it” orientation detracts from the ability of the agency to have a meaningful approach to how and where value is created for the taxpayer.

Keep reading this article at: http://www.federaltimes.com/story/government/solutions-ideas/2015/12/23/better-idea-than-do-more-less/77803910/

January 26, 2015 By AMK

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.

Keep reading this article at: http://www.govexec.com/contracting/2015/01/acquisition-101-when-bargain-isnt-bargain/102672/

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.

January 13, 2014 By AMK

OFPP updates rules for how agencies should analyze ways to lower costs

The Office of Federal Procurement Policy is reinvigorating the concepts of share- in-savings and lowering life-cycle costs of programs by analyzing all facets of the approach.

OFPP released the first update to Circular A-131 in more than two decades in the Federal Register on Dec. 26, 2013. The Office of Management and Budget first issued A-131 in 1988 and updated it in 1993, but since then has only offered memos encouraging its use.

A-131 promotes the use of value engineering (VE), which is an organized effort by an integrated product team to evaluate functions of systems, facilities, services and supplies with an eye toward lowering costs and maintaining performance, quality, safety and reliability.

“VE challenges agencies to continually think about their mission and functions — in the most basic terms — in order to determine if their requirements are properly defined and if they have considered the broadest possible range of alternatives to optimize value,” OFPP Administrator Joe Jordan wrote in the notice. “Most importantly, VE enables agencies to achieve greater fiscal responsibility and operate within tighter budgetary constraints. By identifying and eliminating unnecessary program and acquisition costs that do not contribute to the value, function and performance of the product or service, VE can permit programs to continue delivering the same, or an even higher, level of service for less money — a critical capability for managing in a fiscally austere environment.”

Keep reading this article at: http://www.federalnewsradio.com/517/3534771/OFPP-updates-rules-for-how-agencies-should-analyze-ways-to-lower-costs

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

Rockland County in suburban New York City has seen a big improvement in its fiscal health. Budgets in the county (2017 population: 328,868) have been quite tight.

Now that Congress has agreed to a two-year budget framework and passed a $1.1 trillion spending bill, the federal government finally has the opportunity for budget predictability that has eluded most agencies since 2010.

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