LPTA is a very unpopular acquisition strategy these days. The mere mention of this particular four-letter word seems to raise people’s blood pressure. I have posted several articles on LinkedIn about LPTA, talked about LPTA on the Contracting Officer Podcast, and started discussions with offerors and clients about the value and logic of LPTA to the buyer. I am often met with a puzzled look (in the best case) and outright hostility (in the worst case).
Their argument centers around the principle of LPTA being a “horrible way to buy things”.
However, LPTA is how we most often buy in our personal lives. It’s a simple, logical, and efficient way to buy…as long one uses it properly.
For example, when we hire an accounting firm, we decide whom to hire by focusing on their technical acceptability level, such as their knowledge of the accounting rules, referrals, relations, etc. We also focus on the level of expertise and service we need personally. In other words, do we have simple accounting needs based mostly around getting our taxes done. Or, is our financial picture more complex, meaning we have rental properties, a SEP-IRA, a part time job, a portfolio of dividend-paying stocks, and two kids with ‘maturing’ college savings accounts. Also, how much time do we have to do our accounting and tax planning ourselves?
From this list of needs, we decide if we are looking to hire a single person (or even just go buy an H&R Block tax software package), or do we need a team of accounting experts with different expertise in different areas (real estate, dividends, wills, etc.). In the former case, we could be paying between $50 and $300 per hour. However, in the latter case, we could be paying $400 to $800 per hour for this support.
The critics of LPTA say that “it’s all just accounting, so they will always pick lowest price”. However, there is a big gulf between the service we get from a $50/hour vs an $800/hour accountant. This is because the technical capability is VERY different…and therefore so is the price.
While this is a simple example to explain the LPTA process, you get the point.
LPTA is often what we do when we are buying goods and services. Yet I’m surprised by the number of “hostile” responses to the idea of LPTA by many professionals. While it does not apply in many situations, the argument that it never applies is hollow. LPTA will be used…and should be used, in many cases.
However, the question I often get is: If we’re not ready to compete at the lowest possible price…then how to do we compete for LPTA contracts?
Answer: By not focusing on the price alone (the “LP”). Focus instead on the accuracy of (and your ability to meet) the technical acceptability (the “TA”). In order to do that, you need to be ahead of the actual RFP (or even ahead of the acquisition strategy). Be proactive. Don’t wait until Lowest Price is all you have on which to compete. You need to focus on the Technically Acceptability first. Focus more on the TA and a less on the LP.
To prove my point, if you just found the RFP for an opportunity on FBO.gov, then you’re too late to influence the technical acceptability level. At this point in the acquisition cycle, all you have to is the ability to compete on price. It’s when people find themselves in this situation that they come to loathe LPTA.
The problem is not with the lowest price…the problem is that they failed to compete earlier to make the Technical Acceptability match their strengths and then compete on lowest price.
Those two scenarios, while subtle, make a huge difference in your ability to win.