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Nick Wakeman

DISA loses Encore III protests but LPTA survives

The Government Accountability Office is sending DISA back to rework its solicitation for the $17.5 billion Encore III multiple award contract, but one element will remain unchanged and that’s LPTA.

GAO reached its conclusion in early August but has just now released the public version of its protest decision.

UPDATE: DISA has released its revised RFP for Encore III. Click here for details.
CACI International and Booz Allen Hamilton both filed pre-award protests objecting to aspects of the RFP. GAO has sided with the companies on their major points except for the use of a lowest-price, technically acceptable source election process.

But the companies' objections in the areas of cost/price evaluation and technical evaluation were enough for GAO to tell DISA to rework the solicitation.

In the area of LPTA, the two companies argued that the awards for Encore III should have been based on a price/technical trade-off basis just as the awards for Encore II were. They said LPTA was “inconsistent with historical practices.” They also said that the use of LPTA was counter to Defense Deaprtment guidance that says LPTA should only be used when a product or service has well defined requirements.

But GAO found that DISA documented its rationale for using LPTA as the best approach for the procurement. DISA argued that Encore is a mature program with a “substantial commercial application.”

In other words, DISA says that it has been buying the same type of IT services for over two decades. The scope of the performance work statements in the solicitation didn’t contain “Objective or Threshold values” so there was nothing to conduct a cost-benefit trade off.

GAO found that while CACI and Booz Allen (and probably almost any other bidder) would disagree about the use of LPTA for Encore III, the disagreement doesn’t mean that DISA’s choice of LPTA was unreasonable.

It is interesting to me because when GAO announced the decision but hadn't released its document there was a lot of talk in the market that Booz Allen and CACI winning the protest meant that LPTA had suffered a significant blow. It appears that the opposite is true.

So LPTA is alive and well in Encore III.

As for the parts of the protest that the companies won, GAO found fault with DISA’s evaluation methodology because it didn’t provide for a reasonable basis to compare the costs of the proposals from the different bidders.

Another major bone of contention was that DISA didn’t ask for cost-reimbursable rates, only fixed price rates. GAO found fault with this because the majority of task orders under Encore III are expected to be cost reimbursement, not fixed price.

DISA also was dinged by GAO for setting a 50 percent threshold. It would reject any proposal 50 percent below the floor set by the prices for Encore II. But Encore II was conducted as a price/cost procurement, not LPTA. GAO said that DISA didn’t account for this difference in creating the 50 percent threshold.

But despite these victories for the protesters, the big takeaway for me remains the survival of LPTA for a major IT services contract. It is another sign that the government increasingly sees services as a commodity, which will further put pressure on pricing and margins.

Anyone expecting this decision to offer relief from LPTA will be sorely disappointed.

Posted by Nick Wakeman on Sep 06, 2016 at 9:26 AM

Reader Comments

Wed, Sep 14, 2016

LPTA Uber Alles. Feds broke the code many years ago. In 9 of 10 cases, Feds are asking for standard things to be done, and a zillion individuals and firms can perform them, delivering common solutions. Though not identical, they can do the job. That is what makes Fed services a commodity. The word Innovation get used a lot, but 99 of 100 Fed SOWs require no innovation. Indeed they virtually demand what was done before, they award past perf points to those who have. So there is nary an innovative solution called for. Companies therefore have a hard time differentiating--and they should because of the way they recruit, develop and supervise people. That is: sloppily. Sloppily managed human resources are tailor made to deliver commodity services, and that is what the Feds typically get. The world goes on, but the fees are much too high given what is delivered. This business is easy to make money in if u are alert. If you are not, there is little room for error. The taxpayers and clients would do well to continue beating the Commodity Drum. Make sense?

Wed, Sep 7, 2016 Ken Washington DC

Contractors are adapting to playing the LPTA game, but it's the DoD that's the ultimate loser. I find idea that simply because an organization has contracted for skilled labor over decades, that such labor/skills are now a commodity, defies common sense. In reality, it's often the opposite. In my experience, the people who actually do the skilled, technical work on DoD projects generally fall into three categories, Stars, Performers and RifRaff. Stars are the difference between project success and failure. They know the organization inside and out, the mission requirements, the technical details and how to navigate the bureaucracy. In other words, everything that not in the RFP/PWS, but necessary for success. The Performers are skilled and competent, but require Star leadership to maximize their productivity. Rifraff meet minimum resume requirements, but they are mostly useless when it comes to getting actual work done. The upside to rifraff is that they work cheap. LPTA contracts/tasks, especially those for ongoing engineering and technical operations support for an existing DoD IT mission, strongly favor the rifraff over the other two categories. There is simply no value in bidding a Star and even Performers are proving ultimately unaffordable in a winning bid. So, the rules of the game are set. When it's time to recompete, first, you pull your Stars and put them on other projects (often as post award Mods to other contracts won playing this game), second you tell everyone else to expect a 30%-50% pay cut on the next contract. Most of Performers leave and you replace them with rifraff that meets the minimum resume / skill / experience requirements. If you win, the poor GS13s and 14s trying to get work done with the new crew immediately look for ways to get effective people back on board. So, the Mod game begins. In the meantime, the ability to actually complete the mission suffers and in the long run costs DoD more money.

Wed, Sep 7, 2016 LAJ Odenton, MD

For the life of me, I can't see how the government can see services as a "commodity." Sure, there are 1,000s of IT and technical services contractors, and I suppose this makes services a commodity by definition. But services are performed by people, and people vary in skill levels & experience. In spite of [often heroic] RFP attempts to define required minimum skill sets & experience, low bidders often sneak in under the wire with folks who can't get the job done. When I contract for a major service on my home like roof replacement or remodeling do I select a low bidder who says they can do the job (i.e., LPTA)? No. I always go for my perceived best value choice, usually supported by several past performance inputs and recommendations from neighbors. In most cases, you get what you pay for. Anybody want to try Bid to Cost again?

Wed, Sep 7, 2016 Troy

COMPASS could have prevented this from happening

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