Low Priced Technically Acceptable (LPTA) Source Selections and Firm Fixed Price (FFP) Contracts in Jeopardy? Or has the DoD Procurement Pendulum Swung?

If you are not a fan of LPTA solicitations or FFP contracts, then there is good news for you! On March 4th of this year, Frank Kendall, the DoD Under Secretary of Defense for Acquisition, Technology and Logistics, issued a memo to the procurement and contracting offices of the DoD stating that LPTA “…has a…limited place in the source selection best value continuum.” The memo further outlines when LPTA and FFP are appropriate to use. LPTA solicitations are to be used only when “technical acceptability standards”:

• Are clearly understood by both industry and government; and
• Are expressed in terms of performance objectives, measures, and standards that map to…requirements documents; and
• Lend themselves to technical evaluation on an acceptable/unacceptable basis.

If all of the above do not apply, there appear to be grounds for a contractor to request that the solicitation not be issued on an LPTA source selection basis. The memo then discusses when the use of FFP contracts is appropriate and inappropriate. According to Mr. Kendall, FFP contracts are appropriate when requirements are easily understood and tied to clear and measurable outcomes. But when tasks, efforts, and outcomes to be performed by the contractor cannot be firmly predicted, Cost-Plus-Fixed-Fee, Term, Level of Effort (CPFF LOE) contracts should be used. The memo does address the possible use of Time and Materials (T&M) contracts, but leaves the reader with the impression that due to the inherent lack of incentive for cost control by the contractor, T&M is not favored over CPFF LOE. It would appear that the DoD procurement pendulum is swinging away from LPTA and FFP and back to best value trade-off source selection and CPFF LOE contracts.

, , , , , , , , , , , ,

Comments are closed.