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18 Thursday, Dec 2014

A Consumer’s View of Lowest Price Technically Acceptable (LPTA)


Die tCoke Vs Diet PepsiI am a LPTA consumer. My drink of choice is caffeine-free Diet Coke, when I shop the "lowest price" I can normally buy a 64 ounce bottle with prices of between ninety-nine cents and $1.99. Some large box grocery stores use a pricing technique of buy 4 for a price of $5. They make us do math and make us think you have to buy in volume to get the $1.25 price which is mostly never true.

 

So here I am pushing my cart through Safeway, my choice of big box stores (since they also give me points toward gas discounts at Exxon) and I come to the soda section. My favorite drink of choice caffeine free Diet Coke is not on sale and it's priced at $1.99. Complete sticker shock!

In my "Lowest Price" evaluation earlier this item is truly "Technically Acceptable" but it is not in the "Competitive Range" required under my "Lowest Price" scenario. So I continue to march down the aisle to my next best choice, caffeine-free Diet Pepsi. It is on sale for 3 for $5 ($1.66 each, excuse my math here but the penny must go somewhere unless we are in Canada where it just goes away.) I put the one bottle of Pepsi in my cart and continue my shopping. But, as I turn around the corner I see a display of Safeway brand Diet Cola priced at $2.49 for a 12 pack of 12 ounce cans.

My heart is torn and I find my self deliberating between Diet Cola and caffeine-free Pepsi. Is "caffeine free" so important to me that it makes all other Diet Cola " technically unacceptable" or can I in the face of " Lowest Price" justify the additional cost. I put the Pepsi on the shelf and put the Safeway brand of Diet Cola in my cart. I think I will have buyer's remorse but if LPTA determines my purchase I am driven to the "lowest price" unless the item for purchase is truly not "technically acceptable".

I would hope that you as a contractor can make a better case with your current customers than I did with myself over what is truly technically acceptable. In this uncertain time with Sequestration in full bloom the things that were consider "technically acceptable " by Federal consumers are changing based on reduced dollars available to spend within their agencies. " Lowest Price" will always be the path of least resistance for Government buyers. It is up to the contractors to help define "Technically Acceptable". The old adage "buyer beware "does us little good when dealing with inexperienced over extending Government Contracting Officers. Or, as some would say it is easier to do it "twice "than to do it "right".

Please comment below or send me your thoughts:

Comments

#8 Jenny clark
Interesting article - makes you think about how your customer compares values....
Heard from several government speakers at the Professional Services Council conference recently ... some felt that keeping the price down was the best way to rein in the technical requirements and others indicated that justifying a price differential over 10% required additional approvals ..
So you have to think about how your government customer has to approach this in order to get the services they need
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#7 Wesley
As anyone will tell you, Coke and Pepsi and generic Safeway colas do not taste alike; if the comparison was for Diet Cokes at three different stores, the analogy would hold true. But if I am the command pilot of a Space Shuttle, I would very much prefer my O rings be made by a company that scored an "A", not a "C" (although a "C" is technically "acceptable". LPTA is a cop-out by the government. Best value is the only way true way to run a competition.
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#6 Al Lee
As was pointed out by someone else, the example you provide does not mirror what goes on in the real world; at least not the IT sector. I find absolutely no benefits to an LPTA contract; for the government or the contractor. Just yesterday, I attended a contracting conference in San Antonio TX. I posed a question to three contracting officers as to why there has been an uptick in the use of LPTAs. The rationale: because the government cannot adequately define the award criteria and defend it, and LPTAs are the path of least oversight and resistance in the acquisition community (particularly during sequestration when staff have been reduced). I thought, you have got to be kidding me!
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#5 Bill
Quoting Ray:
Lowest price is not going to provide the end user with lowest risk!


It may, or it may not. The problem really discussed isn't the validity of LPTA approach, but how the consumer defines technically acceptable. In this case, the user varied from the scientific process and failed to define his criteria before he started comparing the items. In this case, he didn't even set his screening criteria. So, in the end, he isn't even doing LPTA, he is doing a best value judgement, trading features for cost.

But, I do get the point that we have to help our technical cusotmers define the criteria of technically acceptable.
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#4 Tim Pepper
Nice analogy, but I was distracted by the statement that you shop at Safeway because they give you gas points for Exxon). I thought you would pursue a line of comparison of Safeway to other big box stores but you dove deeper into soda brands.
You began with one brand of caffeine-free diet soda, compared another, and finally selected a caffeinated diet store brand.
So the low price comparison breaks down along simply diet sodas and the inclusion or exclusion of caffeine was optional.
When the government changes the evaluation criteria that arbitrarily, it opens the potential for protest by bidders.
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#3 Mike Reed
Unfortunately, in the services sector, it's not really a choice between Coke and Pepsi. For incumbent contracts, the government desires and will likely receive the incumbent staff back on task. The difference will be lower salaries, lower benefits, unhappy workers and the instability of turnover. All of this provided by a body shop that hadn't heard of the client or the technical delivery area until an alert popped up in their opportunity tracker. In the short run, the government appears to have saved money and gotten the same results. In the long term the work will ultimately revert to those that can't do anything else and meet only the most limited interpretation of technically acceptable. You will ultimately get what you pay for and that is not a good thing.
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#2 LaMont
Great article John. A practical way to look at what is truly
happening with the gocernment's response to LPTA. You should
expand the article and submit to Washington Technology
Magazine.
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#1 Ray
Lowest price is not going to provide the end user with lowest risk!
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