Will the new LPTA rule which is effective today make things better for small businesses or…

It used to be possible for a good small business to enter the GovCon market simply by proving they could do the job and that they could do it for a low price. Big companies never liked this reality. And neither did many in government, some of whom believe that working with small businesses is never a good idea when there is a large, well-known company that can do the same work.

It was never clear to me though that this strategy and the companies that employed this strategy to penetrate GovCon universally failed and jeopardized government operations. There were always a few situations where this was true. But like most things we only hear about the colossal failures, not the contracts that carried on with minimal if any impact to government operations.

If this rule, limiting the use of LPTA, is taken to the extreme, there will be fewer and fewer opportunities for small businesses to use this strategy going forward.  If applied inappropriately and overzealously, more and more requirements for routine, commoditized services will be competed using some sort of cost/price tradeoff that could unfairly advantage more experienced companies. The result will be an increase in the prices that the government pays without a corresponding increase in service delivery levels.

I’m not alone in the concern. Read the following comment from the Federal Register notice.

“Respondents expressed concern that the rule will be considered a complete ban on the use of the LPTA source selection process. A respondent is specifically concerned that the use of the LPTA source selection process is prohibited for a significant number of  information technology (IT) supplies and services that can be appropriately purchased using the process. As a result, the respondent recommends that the rule not be implemented, or be revised to narrow the scope of IT products and services to which the rule applies, because the rule, as proposed, will result in increased acquisition lead times and higher prices without a corresponding increase in quality of services.”

The Federal Register response to this comment makes clear that the rule is not intended in any way to ban the use of LPTA. 

But I agree with the commenters. But the problem is not LPTA. The problem is that the government often did a poor job of describing what technical acceptability looking like. So, I’m not sure adding a rule to the FAR that requires the government to do what they’ve always struggled to do is a good or practical solution.

FAR 15.101-2Ic)(1) states:

“The agency can comprehensively and clearly describe the minimum requirements in terms of performance objectives, measures and standards that will be used to determine the acceptability of offers.”

In other words, clearly define what technically acceptable is for each requirement using LPTA.If it was easy to adequately define what technical acceptability was, the problem with LPTA would never have materialized!!

The impact and application of these new requirements won’t be felt or even measurable for quite some time. Here’s my concern. The new rule, which simply implements the law, will serve as a barrier to using LPTA even when appropriate. Whenever there is a rule that discourages the use of a procedure, it tends to morph into a de-facto prohibition that requires higher levels of approval to use a technique or tactic that is perfectly appropriate. One only need to look at the reduced use of T&M contracts over time based on a simple statement in the FAR that T&M contracts may only be used when the CO justifies in writing why no other contract type is suitable. This requirement has resulted in an increase in the use of burdensome, expensive cost reimbursement contracts that often fail to produce results.

What do you think? Is the new rule good or will it cause unintended consequences that are not the basis of the law?


Leave a Reply

Your email address will not be published. Required fields are marked *