ASHBURN—As the federal government continues to tighten their budget, the same goes for all of the federal departments and agencies. What does this mean for companies interested in pursuing government contracts? Well, with less money to spend, it means that contractors should expect most of the contracts to be awarded to the Lowest-Price, Technically Acceptable (LPTA) offeror.
Though lowest price technically acceptable is often referred to as the alternative to best value, it is actually stated in the Federal Acquisition Regulation (FAR) as a type of best value. FAR Subpart 15.1—Source Selection Processes and Techniques defines Best Value as:
Best Value - Defined
FAR 15.101 Best value continuum
An agency can obtain best value in negotiated acquisitions by using any one or a combination of source selection approaches. In different types of acquisitions, the relative importance of cost or price may vary. For example, in acquisitions where the requirement is clearly definable and the risk of unsuccessful contract performance is minimal, cost or price may play a dominant role in source selection. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection.
Below the above description, the FAR presents LPTA as a subsection of best value, stating:
LPTA - Defined
FAR 15.101-2 Lowest price technically acceptable source selection process.
(a) The lowest price technically acceptable source selection process is appropriate when best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price.
(b) When using the lowest price technically acceptable process, the following apply:
(1) The evaluation factors and significant subfactors that establish the requirements of acceptability shall be set forth in the solicitation. Solicitations shall specify that award will be made on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors. If the contracting officer documents the file pursuant to 15.304(c)(3)(iii), past performance need not be an evaluation factor in lowest price technically acceptable source selections. If the contracting officer elects to consider past performance as an evaluation factor, it shall be evaluated in accordance with 15.305. However, the comparative assessment in 15.305(a)(2)(i) does not apply. If the contracting officer determines that a small business’ past performance is not acceptable, the matter shall be referred to the Small Business Administration for a Certificate of Competency determination, in accordance with the procedures contained in Subpart 19.6 and 15 U.S.C. 637(b)(7)).
(2) Tradeoffs are not permitted.
(3) Proposals are evaluated for acceptability but not ranked using the non-cost/price factors.
(4) Exchanges may occur (see 15.306).
The above FAR provisions exhibit that Best Value speaks for itself, the government wishes to obtain the best quality service they can for a reasonable price. Though they are seeking a fair and reasonable price, the quality of the service is of more importance than price. On the other hand, when it comes to LPTA, as long as the evaluators deem the bidder as acceptable under the proposal requirements, then the price becomes the sole determining factor.
So, why is LPTA such a big deal? Most people would assume that with sequestration affecting all of the agencies, this should be a fairly good solution. This may be true, but does lowest price guarantee the best quality?
Historically, Lowest-Price, Technically Acceptable solicitations were primarily used for the purchase of products and non-complex services with little risk, especially towards national security matters; such as janitorial services. However, recently we see LPTA solicitation within extensively complex services; services in which quality is far more important than price. This is not to say that the government should spend an outrageous amount of money for these projects, but should a few hundred dollars be the difference between two-star and five-star quality service? Additionally, will the compromise to service end up costing the government more money in the long run? For example, the old saying “you get what you pay for” may hold true for LPTA contracts. In the end, the awardee may not perform to standards; which risks the government needing to spend additional funds to manage the contract, or potentially terminating the contract to then put it out for recompete. The push for lower prices and acceptable quality will not save the government money if performance is sacrificed.
The best way to determine the quality of service to be expected from a contractor is from their Past Performance records. As a requirement under Best Value solicitation, Past Performance holds a hefty weight in the evaluation/selection process. Within LPTA solicitation, it is ‘technically’ a requirement; however, it has a considerably large loophole.
According to the DoD’s Source Selection Procedures past performance is considered required criteria to be provided within a proposal for evaluation. It states the following:
A.2.1.2. Past Performance.
“Past performance shall be used as an evaluation factor within the LPTA process, unless waived by the PCO in accordance with FAR 15.101-2(b). It shall be evaluated in accordance with FAR 15.305 and DFARS 215.305. However, the comparative assessment in FAR 15.305(a)(2)(i) does not apply. Therefore, past performance will be rated on an “acceptable” or “unacceptable” basis using the ratings in Table A-2.”
Table A-2. Past Performance Evaluation Ratings
Based on the offeror’s performance record, the Government has a reasonable expectation that the offeror will successfully perform the required effort, or the offeror’s performance record is unknown.
Based on the offeror’s performance record, the Government has no reasonable expectation that the offeror will be able to successfully perform the required effort.
Though one would think that this is sufficient for determining whether a bidder has the necessary qualifications and experience to support the proposed task, it is flawed. Within the appendix, directly below this table, it states:
“Note: In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available or so sparse that no meaningful past performance rating can be reasonably assigned, the offeror may not be evaluated favorably or unfavorably on past performance (see FAR 15.305 (a)(2)(iv)). Therefore, the offeror shall be determined to have unknown past performance. In the context of acceptability/unacceptability, “unknown” shall be considered “acceptable.””
This note nullifies the entirety of the past performance requirements within the LPTA source selection framework as it allows offerors to essentially disregard this requisite. If a bidder’s past performance record is “not available or so sparse that no meaningful past performance rating can be reasonably assigned” one would typically assume that they are thus unqualified for the job; for the lack of experience in handling a task or assignment of relevance, or they could have opted to disregard the section based on unacceptable performance history. However, rather than being deemed unacceptable, the bidder is given a free-pass.
“LPTAs may be used in situations where the Government would not realize any value from a proposal exceeding the Government’s minimum technical or performance requirements, often for acquisitions of commercial or non-complex services or supplies which are clearly defined and expected to be low risk.”
This is not to say that LPTA solicitation is in any way defective or insufficient, only that it should be offered towards those services in which it was initially meant for. There are countless jobs and services that would be a perfect fit for LPTA based solicitations; however, when it comes to complexity, quality past performance must be a primary evaluation factor during the source selection process.
12 July 2013 -- Written By: Christine Ray