Bob Lohfeld

OPINION

Why some companies embrace LPTA contracts

Lower barrier to entry means marginally credible firms have shot at winning procurements

Some companies are actively seeking lowest price, technically acceptable (LPTA) professional services bids—but they’re not the companies you’d think. You’d expect companies with deep experience in their fields that have honed their operating costs to the minimum and are operating at maximum efficiency to seek out LPTA bids where they could compete on price—but it is just the opposite.

Inexperienced, marginally credible firms are finding LPTA procurements provide a unique opportunity to penetrate government market segments that they would otherwise have been unable to enter. Here’s how it works.

LPTA lower the barrier to entry

Under LPTA bids, the government awards contracts to offerors with minimally acceptable technical proposals rather than to offers with the best technical proposals as is normally done in best value trade-off procurements.

In other words, the LPTA evaluation criteria provide no additional value to the market leader company over the market laggard company. To pass the test of technical acceptability, a company merely has to squeak over the hurdle of minimal acceptability, and it doesn’t matter whether the company squeaks over the hurdle by an inch or clears it by a mile. The evaluation score is the same. All technically acceptable proposals receive the same passing score.

This creates a disadvantage for the best companies in the market that normally compete on their technical superiority. LPTA bids neutralize the competitive advantage of technical superiority because there is no additional value in having a superior technical proposal.

LPTA procurements encourage companies that can only write a marginally credible proposal to bid since they only need to meet the minimum acceptability level and nothing more. The net effect is that these procurements let minimally qualified companies compete on the same technical footing as the best companies in the field.

This lowers the barrier to market entry and allows minimally qualified companies to enter markets that they could have never competed in before.

LPTA waives the requirement for past performance

Additionally, under LPTA bids, the government will waive the requirement that the offeror demonstrate relevant, successful past performance.

Most LPTA solicitations require the offeror to provide contract references demonstrating successful performance of contracts with similar size, scope, and complexity. In the event the offeror has no record of past performance, or for offerors for whom the record of past performance is not available or is so sparse that no meaningful past performance rating can be assigned, the government will not evaluate the offeror favorably or unfavorably on past performance.

Instead, the offeror will be determined to have unknown past performance. In the context of acceptability/unacceptability in an LPTA bid, unknown is considered acceptable, and a passing score will be awarded for the past performance evaluation factor.

This further lowers the barrier to entry, letting companies with no past performance compete with the same past performance score as market leaders maintaining unblemished past performance records.

Using LPTA to enter new markets

The net effect is that LPTA procurements lower the barrier to market entry, thereby allowing companies with minimally acceptable technical proposals and limited or no past performance to buy into markets they could never have enter previously.

As a market-entry strategy, LPTA works well for outsiders to gain a foothold they would otherwise have no chance of gaining.

About the Author

Bob Lohfeld is the chief executive officer of the Lohfeld Consulting Group. E-mail is robert.lohfeld@lohfeldconsulting.com.

Reader Comments

Wed, Oct 2, 2013

Bob - it looks like you are mising the Technically Accpetable part of LPTA. There are many well exectued LPTA contracts where the customer have provided exceptional CPARs for the work the contractors have done. Higher price tags do mean better solutions. There just as many best value failures as well so your conclusions are inaccurate

Fri, Sep 6, 2013

Having worked in the Government space for over 20 years I have found that often the Gov't is not capable of writing accurate and detailed requirements which leads to poor procurement decisions. In the same manner the best value approach can lead to political influence on the SSO from internal or external stakeholders which has the potential to sway an award in toward a favored contractor. Perhaps a little more effort should be spent on writing accurate requirements which truely reflect the needs of the customer and then holding all parties accountable for their proposed solution.

Mon, Aug 26, 2013

That's what the government needs--take an" inexperienced, marginally credible firm" and have them low ball a project. A recipe for disaster.

Thu, Aug 8, 2013 Dayton, OH

Bob, I disagree with your premise. To generalized just lumping all LPTA winners in the sub-quality category. Why should the government pay PWC their premium rates when they can get good quality from a small business? We are a small, highly regarded business that regularly beats the big guys on price and provides high quality people.

Thu, Jun 27, 2013 Ed H

I have experience with the VA awarding LPTA to competitors (OEM) who have clearly skirted the truth on their T/A portion, won the deal and then when VA went to deploy, found out the solution did not work! In one case they cancelled the contract and flushed $2.3M of their $5M budget down the toilet. In another they had to go back and do another RFP a year later to buy and additional $6M in hardware to make the other solution work. On that one I lost the original deal by $1.1M. LPTA is a massive waste of taxpayer money. Acquisition officers and end users need to be training on how to write better requirements than can be adequately judged under best value.

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