Following each Nash & Schooner Hot Topics Webinar event, we interview Professor Ralph Nash to get his thoughts on the topic following the panel discussion. On November 29th, Professors Ralph Nash and Steve Schooner and Dean Dan Gordon discussed LPTAs.
What is the difference between an LPTA competition versus a sealed bid competition?
With sealed bidding of course you open the bids publicly whereas in LPTA you don’t get see other prices or the other bidders’ technical proposals. In addition, in sealed bidding, a bid is responsive or non-responsive with no way to fix it except, of course, if you are using two step. Whereas in LPTA you have the option of negotiation and using negotiation to get unacceptable bids to acceptable. I don’t think that in LPTA this happens too much, but it could.
Also in sealed bidding it is presumed that you will evaluate all the offers. But we discussed in the webinar that in LPTA you could use a much quicker procedure of opening the proposals, establishing who had the low price, determine if it is technically acceptable and award without evaluating all the other offers.
What is the appropriate place for an LPTA competition?
We had some disagreement about this in webinar.
All of us agreed that the key issue is: can you define a level of acceptability that will guarantee that when you award to the low price that company will be able to meet the agency’s needs? That is the ability to define requirements in a relatively precise way.
Dan Gordon, who seems somewhat opposed to LPTA usage, was leery of the fact that LPTA would take away from the government’s ability to award to a person with a better performance rating but who didn’t have the low price – paying money to get the better contractor with a better past performance rating. He is concerned that LPTA gives the agency no room to pay more for what may be the better performer.
I don’t disagree in principle. But my problem is that stating the LPTA rule that strictly is a way of talking people out of LPTA. My view is that for mundane services, past performance evaluation is quite subjective. I’m not sure the government should be paying more for what is perceived as slightly better service. Similarly, with commercial products the government might want to pay more for a company that always meets its schedules but this would vary with the urgency of delivery requirements.
But there is a problem in the past performance issue. Under the LPTA scheme, companies with no past performance history are deemed acceptable, the same as a company with a good past performance record. But this is an issue of thinking through the problem of whether or not you would get bidders with no past performance history. If an agency concluded that there would be such competitors, it could include an experience evaluation factor in the solicitation where there is no requirement that a company with no experience be given a satisfactory rating.
During the webinar, the disagreement was on how strictly the LPTA competition must be used. But we all agreed that LPTA requires being able to define the requirements.
Why is there a rising trend in LPTA usage?
Money is tight and it could be driving people to using LPTA. I don’t see this as as big a threat as some people do. It seems to me that as money becomes tighter and tighter, even when agencies use trade off procedure they are less likely to use the trade off to take the higher priced offer. The other possibility is that some agencies see it as a more efficient buying procedure.
In the current budget environment, should contractors trust solicitations saying non price factors are significantly more important than price factors?
The relevant importance statement tends to be misleading by its very nature because it doesn’t control the selection decision. But this tendency to always say non price factors are significantly more important than price is a misleading statement. I’ve been trying to convince agencies that they should be redrafting the language to say that non price factors are equal in importance to price factors. As money gets tighter I think we see that agencies are less willing to find that the higher rated offer is worth the extra price.
As a personal aside, Dan argued strenuously that LPTA takes valuable discretion away from the contracting official, the discretion to pay more to get more value. That is certainly true; it does. What is missing from that discussion is any analysis of how well that discretion is used in the real world. The assumption is that it is always used well. But if you are following GAO decisions and asking what value did the government get for the extra value paid, there are a number of times where you have a hard time coming to the conclusion that the government got the value of the extra price.
This leads me to wonder, does best value lead contracting officers to believe that they should not award to the lowest price. Vern [Edwards] says giving people discretion is a wonderful thing if you give discretion to the people smart enough to use it well. All of this leads me to the conclusion that taking away discretion may not be as big of a problem as Dan thinks it is.