Friday, October 5, 2012


In the old days, the government drew up detailed specifications and put procurement out to bid.  Advertised procurement, it was called (today's almost never used "sealed bidding" in FAR Part 14).  It was akin to today's lowest price, technically acceptable (LPTA) favorite flavor.  Advertised procurement went out when best value came in.  It was the real value we wanted, not just someone who could agree to perform to the government's specifications for the lowest price.  We raised our expectations.  Government, especially military, readiness and superior performance demanded high quality.

But then came budget austerity.  Then came a dwindling federal acquisition workforce, overworked and under educated.  Then came competition born from the austerity making it too much trouble for the procurement workforce to deal with best value.  (Yes, LPTA is supposedly a form of best value but it is not.)  In its true, purest form, best value is involves analyzing price and technical ingenuity and perhaps paying more to achieve superior performance.  LPTA, like advertised procurement (sealed bidding), fits commodity buying perfectly.  Complex requirements, however, are entirely different.  Best value trade offs are a perfect fit there.

LPTA should not be used for complex solutions.  Greater benefits and long-term results are achieved by decisions based on value.  LPTA has no discriminators for technical superiority.  LPTA is all about adequate and cheap.  Why invest in research and development in the LPTA world?  The technical bar is the lowest competitive common denominator and the award goes to the contractor most willing to buy in.  Yes, that's another problem.  Buying in is back in vogue.

Our friends at the Professional Services Council (PSC) have just published their Services Sector Review which on page 36 contains many of these same thoughts and points and concludes:
Denying bidders credit for the innovations and performance enhancements that drive long-term efficiencies, or other discriminators, offers industry no incentive to be anything beyond mediocre.  As a result of bidders being driven to mediocrity, government contracts could actually cost more in the long run and perform worse than if the government had evaluated bids based on best-value.
Budget austerity does not mean we must lower expectations.  The government acquisition workforce will have to work a little harder, to be sure.  But the reward will be in maintaining our incentives to excellence.  We just don't need to lower our expectations.  We really should do all we can to prevent our expectations being pulled lower by short sighted, easy way out procurement solutions.        


  1. "...offers industry no incentive to be anything beyond mediocre."

    Actually, it offers no incentive to be anythng but barely acceptable.

  2. Yes, Tradeoffs reward higher value contractors generally. The downside for the government is that they tend to be more expensive (at least in the short-term). The problem for the government agencies is that as funding gets cut they will be required to focus on the short-term bottom line.

    One possible way to address the short term funding restrictions with the long-term desire to reward more innovation is to encourage Congress to add a new Best Value evaluation method - the Fixed Price Technical Tradeoff (FPTT). The FPTT would basically be the "Yang" to the LPTA "Ying."

    In an FPTT, the government issues the solicitation with the non-price eval factors (say Technical and Past Performance), and the relative weighting between the non-price factors. The twist is that with the solicitation, the government RELEASES THE FIXED PRICE AMOUNT THAT THEY WILL AWARD TO THE WINNER OF THE COMPETITION. The government evaluates the proposals based solely on tech factors (and conducts discussions if necessary) and then awards to the best technical value proposal - at the Fixed Price the government first announced with the solicitation.

    It seems to me that an FPTT would minimze the price risks that the government will feel as sequestration cuts kick in - but at the same time reward innovative companies in a much more consistent manner than with LPTAs.