How Better Buying Power is Driving LPTA Use at the DoD
Published: July 14, 2015
LPTA proposal evaluations have evolved naturally from the changing circumstances – geopolitical, technological, program management, policy, and cost – in which the DoD is required to operate
Over the last few years, the use of lowest price, technically acceptable (LPTA) source selection procedures has been on the rise across the U.S. federal government. Nowhere has this trend been more in evidence than at the Department of Defense where, by my calculations using one set of data available here at Deltek, the use of LPTA rose 22.6% from fiscal year 2010 to 2014. LPTA evaluations are used predominantly for commodity IT procurements, but it is not unheard of for services contracts to also be awarded on an LPTA basis. Vendors and even leading procurement officials in the Defense Department have decried this practice as detrimental to the long-term prospects of success for complex programs. I fully agree with this criticism and will not go into the reasons why here. Many other better qualified commentators have already described why using LPTA for services awards is problematic. It is a horse that has been beaten to death.
My interest here is in outlining the drivers of LPTA use in the DoD. This should be simple, right? Cutting costs is the reason. The Defense Department, finding its budgets challenged after a decade or so of steady growth, sees a need to squeeze the price of goods and services to lower its costs as much as possible. To this I answer, well, yes and no. Yes, the DoD wants to drive down costs. However, no, reducing costs is not the only factor driving the use of LPTA. In fact, it might not be even the primary reason because there is a significant policy driver as well – the DoD’s Better Buying Power (BBP) initiative.
BBP is a policy response to a technology problem. It seeks to change the way the department acquires and inserts technology into its IT environment because the DoD cannot innovate its IT environment rapidly enough. The technology in question doesn’t even need to be “emerging” for the principles behind BBP to apply. Take, for example, the effort to implement the Joint Information Environment using standardized MPLS routers and switches. MPLS gear is not cutting edge technology, but its implementation on an enterprise basis is facilitating a sea-change in the way the DoD operates and secures its networks. Moreover, this change does enable the use of emerging technologies like big data analytics.
Leaders across the Department of Defense are acutely aware of the technological challenges that the United States faces from state and non-state actors. These leaders understand that in its current form the DoD’s procurement process cannot acquire new technology rapidly enough to keep up with the pace of change. Therefore, a new approach is necessary, an approach which maximizes the use of short term procurements with limited objectives and which employs standardized technology solutions that are interoperable, open, and modular.
Since June 2010 this standardized, dare I say “agile,” approach has been formalized into the Better Buying Power initiative. Ashton Carter, then the Under Secretary for Defense, enshrined the notions of rapid technology procurement in BBP 1.0 by requiring more frequent contract recompetes, adopting a uniform taxonomy for services, demanding systems be based on open architecture, and by setting shorter program timelines according to which DoD personnel are required to manage, including managing the necessary procurements. Subsequent iterations of BBP have only strengthened the language around these concepts and all in the name of speeding up technology procurement so that the U.S. can retain its technological warfighting edge.
BBP drives the use of LPTA by mandating that technical specifications spell out short term, sprint-like baselines for industry to meet. These short term sprints are inherently simpler than long-term large-scale programs. DoD program personnel can then quickly check the “technical acceptability” box and move to an award based on price. Essentially, an LPTA evaluation process is well suited to technical requirements that have been broken into bite-sized chunks for short-term contracts which deliver a limited set of capabilities. Subsequent procurements can then build on the delivered capability to advance the program further down the timeline.
LPTA has become a natural outgrowth of the changing circumstances – geopolitical, technological, program management, policy, and cost – in which the DoD procures the technology solutions it requires. Within this spectrum of considerations cost-cutting is merely one of many underlying factors driving the use of LPTA. The demands of rapid technological change and agile procurement as a response to that change also explain why LPTA will not be going away any time soon no matter what is said by leaders in the Department of Defense.