More than 200 members of the government contracting community gathered at the Gannett Conference Center in McLean last week to gain key insights into the impact of Lowest Price Technically Acceptable (LPTA) procurements on both government and contractors.
The event brought the industry’s best and brightest together to discuss how the use of LPTA procurements is affecting contractors and the deliverables government receives under LPTA contracts. The new study from Market Connections, Inc. and Centurion Research Solutions revealed that while LPTA may sacrifice long-term value for short-term cost savings, LPTA is the “new reality” in government procurement, at least for the foreseeable future.
With this new reality, contractors need to adjust operational and pursuit strategies to maintain success.
“As a result of LPTA, we are asking our contracts person to be more proactive across the board as wall as take on more of a relationship management role for government customers,” said panelist Ray Whitehead, vice president of business development and strategic planning at General Dynamics Information Technology (GDIT).
In the survey, government contractors said they are proposing less innovative solutions, reducing indirect rates, relying more on junior staff and reducing staff and salaries in response to the budget squeeze LPTA procurements necessitate.
Among the key findings that were discussed from the survey results:
- LPTA sacrifices long-term value: 65% of contractors and 43% of government employees believe that LPTA procurements sacrifice long-term value for short-term cost savings.
- Less qualified contractors win LPTA contracts: Both audiences (71% contractors and 59% government) see the same two main drawbacks of LPTA for the federal government – the potential for contracts to be awarded to less qualified companies and sacrificing long-term value for short-term cost-savings.
The panelists’ discussed how being an incumbent is no longer an advantage. This challenges contractors to continue to provide value and better leverage their existing customer knowledge and insights.
“As an incumbent, you have customer access during the pre-RFP stage which provides you with the opportunity to help them define what is technically acceptable – this will allow you to protect your turf,” said Obertubbesing.
The past year has brought great uncertainty within the federal government, and the total impact on the contracting industry is still unknown. This survey and the LPTA impact event allowed decision-makers to share their insight and gave attendees a platform to openly discuss their concerns.