Research Resources Defining Best Value Procurement Types: ●Lowest Price Technically Acceptable (LPTA) ●Trade-Off ●Faux Trade-Off Conclusions

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(GSA) “Using Multiple Award Schedules” (DOD) “Source Selection Procedures” (FAR) “FAR 15 Contracting by Negotiation” (AMC) “The Best Value Approach to Selecting a Contract Source”

Best value might be on either side of the continuum Acquisition method must be tailored to the requirement Source: GSA

Lowest Price Technically Acceptable (LPTA) Trade-Off Faux Trade-Off

Under LPTA selection is strictly based on price once some minimum technical hurdle is met: “…past performance need not be an evaluation factor…” “…comparative assessment…does not apply…” “Tradeoffs are not permitted.” “Proposals are … not ranked using non-cost/price factors.” Source: FAR

Technically Acceptable

“LPTAs may be used in situations where the Government would not realize any value from a proposal exceeding the Government’s minimum technical or performance requirements, often for acquisitions of commercial or non-complex services or supplies which are clearly defined and expected to be low risk.” Source: DOD

Motorists routinely benefit from service that exceeds minimum SLAs I/M programs are highly complex Very challenging to clearly define every aspect of every I/M deliverable I/M is exceedingly high risk from a public satisfaction standpoint

Allows for a trade-off between non-cost factors and price/cost Allows Agencies to accept something other than lowest price if that yields better value Includes rating system to determine best value Source: DOD

Non-Cost Factors Cost

Technical approach Technical capabilities Management approach Management capabilities Personnel qualifications Past performance Source: AMC

Administrative costs Socioeconomic – minority & women owned Environmental & energy efficiency Useful life Operational costs Service Source: GSA

According to Department of Defense: “Best value procurements involve trade-offs between cost, technical, and past performance factors to determine which option provides the solution that best meets the government’s needs while reducing associated risk.” Source: DOD

According to U.S. Army Material Control: “…a cost realism analysis is performed and used to determine the ultimate most probable cost of performance…” “…especially when there are concerns that offerors may try to ‘buy in’ or where other complexities of the acquisition could result in misunderstanding the requirements.” Source: AMC

According to U.S. Army Material Control: “Significant differences between proposed and most probable costs may signal increased performance risks.” Source: AMC Trade-Off with Cost Realism Analysis belongs in I/M !

Trade-Off RFP language with price dominated scoring criteria Orthodox Trade-Off weighs price in the range of 10% - 30% Faux Trade-Off weighs price in the range of 30% and up

WEIGHTED PRICE Over-Weighted Price Qualifications Technology Service For any price weighting over 30% …

Non-cost factors don’t add to overcome over-weighted price Agency forced to take on a contract they believe may be a problem There is no minimum technical hurdle Unrealistic pricing is unsustainable

Over 4-7 year contract unsustainable price eventually leads to: Less service to shops and motorists More work and stress for the Agency Poor quality inspections Higher risk of failure, fraud and bad press

I/M complexity and risk requires Trade-Off I/M complexity and risk requires Cost Realism Analysis Cost weighting over 30% is Faux Trade-Off Faux Trade-Off will NOT deliver quality, convenience, service, or peace of mind