The Defense Department continues to deny any systemic problem with using lowest-price technically acceptable (LPTA) too much for contracts. But there is a growing body of evidence where perception is overshadowing reality, therefore making LPTA a serious problem.
Two recent examples show just how much work DoD must do to either change the opinion of industry and therefore Capitol Hill, or actually educate its workforce to stop using this approach inappropriately.
The first case study is the ENCORE III IT services contract. Two vendors, Booz Allen Hamilton and CACI, submitted pre-award bid protests to the Government Accountability Office.
The second example is new legislation coming from Sens. Mark Warner (D-Va.) and Mike Rounds (R-S.D.). The two members of the Senate Armed Services Committee introduced the Promoting Value Based Defense Procurement Act of 2016 (S.2826) to limit the use of LPTA, especially in IT procurements.
“The current LPTA focus on price makes sense when the Pentagon is purchasing belts, bolts, and ballpoint pens, yet it provides no incentive for DoD to seek-out the most innovative IT and engineering solutions, especially important as we are working to encourage more innovation in cybersecurity. In many ways, LPTA discourages participation by companies investing in cutting-edge capabilities,” Warner said in a release. “Innovation and technological problem-solving are key to maintaining America’s competitive edge in the 21st century, and Pentagon procurement officers require the flexibility to use updated criteria when evaluating cutting-edge technology and IT services in ways that protect our military men and women and the taxpayers.”
This takes us back to ENCORE III. Both contractors argue the Defense Information Systems Agency’s approach to this 10-year, $17.5 billion multiple award contract for technology services is flawed, in part, because of the request for proposals is asking for LPTA bids. Two federal contractor associations raised similar concerns recently in a letter to DoD as well.
Booz Allen, for example, says DISA’s use of LPTA is inappropriate because it doesn’t follow DoD policy, which calls for using LPTA when there is “known, firm requirements, usually readily available in the commercial marketplace where a fair and reasonable price determination is based on adequate price competition.”
Booz Allen argues that the work under ENCORE III is not subject to “known, firm requirements” because the performance work statement requires the contractor to define the requirements, and includes the requirement for complex work that is not “commercial or non-complex services” or “expected to be low risk.”
“The agency’s decision to select an LPTA approach is unsupportable because it is inconsistent with historical purchases, inconsistent with Department of Defense (DoD) guidance made applicable through regulation, and inconsistent with the RFP requirements here,” CACI’s protest stated. “The RFP here does not include well‐defined requirements and the risk of unsuccessful performance is far from minimal. The RFP includes a high‐level PWS that encompasses a sophisticated set of IT services to be delivered worldwide, while the specific defined requirements to be performed will be articulated at the task order level. The ‘problem statement’ identified in the evaluation criteria is vague, the subfactors seek only general experience in a few areas, and no estimated labor hours are provided. The development of sophisticated IT solutions and performance of the 19 identified performance areas in the PWS all present significant risk of unsuccessful performance. And because this RFP is intended to serve federal agencies across the government, the impact of unsuccessful performance is huge.”
GAO received the bid protests April 25 and has until Aug. 3 to decide.
The protests do not stop DISA from moving forward with accepting bids for ENCORE III, it just can’t necessarily make awards without a justification for overriding GAO’s stay.
The challenges with ENCORE III is part of the reason Warner, whose state includes several DoD contractors, is taking legislative action.
And Warner’s bill follows language in the House Armed Services Committee’s National Defense Authorization Act calling for a study of DoD’s use of LPTA.
“This bill will help make sure that DoD is using LPTA in an appropriate manner while avoiding its use in determining source selection for complex, innovative technology and engineering services, where the least expensive option is often not the best long-term value. This is in the best interests of our warfighters and our taxpayers,” Rounds said in a release.
DoD’s consistent denials of pushing for the use of LPTA aren’t enough or industry believes the military’s words are hallow.
Just last month at the Coalition for Government Procurement Conference, DoD’s Alan Estevez, the principle deputy under secretary of Defense for Acquisition, Technology and Logistics, said reiterated DoD has never issued guidance to contracting officer telling them to use LPTA, and it’s a matter of getting more and the right training down to the contracting officers.
But all this activity shows DoD must do more. A May 2015 memo from Estevez’s boss, Frank Kendall, the deputy undersecretary, telling contracting officers to use LPTA only when appropriate, may need to be reissued, and DoD should put a true educational campaign behind it. Or maybe DoD needs a kick in the pants in the form of a new law.
Either way, the Pentagon’s denials of pushing to contracting officers to use LPTA are getting tired and its lack of credibility is growing with examples such as ENCORE III.