CHAPTER 4 DIFFERENCES BETWEEN LPTA AND TRADEOFF SOURCE SELECTIONS
Both lowest-price technically acceptable (LPTA) and tradeoff source selections require that the government evaluate offerors on at least one other factor in addition to price or cost. In fact, the government may use any number of evaluation factors for either type of source selection. These non-cost factors are generally referred to as merit factors or technical factors. Each factor may have any number of subfactors or may have no subfactors at all.
In an LPTA selection, the proposals must be deemed acceptable on the merit evaluation factor(s) in order to be considered for award. Award is then made to the acceptable contractor with the lowest price or cost, provided that the price or cost has been determined to be fair and reasonable. Some refer to LPTA merit evaluation factors as go/no go or pass/fail factors. A competing contractor whose proposal is unacceptable (or remains unacceptable after discussions and revisions, if applicable) on even one of the evaluation factors is not eligible to receive a contract award.
In a tradeoff procurement, contractors are scored or rated with regard to the merit factors, which are sometimes called variable factors. For example, one contractor may be given a rating of “acceptable,” while another may be found “outstanding,” and yet others could be found “marginal” or “unacceptable.” In contrast to LPTA selections, a tradeoff contract award may be made to an offeror other than the one proposing the lowest price or cost if the source selection authority deems the increase in quality, decrease in performance risk, or both to be worth the additional money. Tradeoff procurements are much like the purchasing we do in our private lives. We look at the differences in quality (as we perceive it) in canned soup brands, for example, and then decide if it is worth an extra 30 cents to buy Campbell’s® rather than the store brand.
If a source selection combines both go/no-go factors and variable factors, it is considered to be a tradeoff source selection. This is so even if only one of several evaluation factors is variable (comparatively scored).
To better understand how these two source selection approaches differ, consider the following hypothetical situation. A fictional LPTA procurement has three evaluation factors:
1. Contractor technical approach
2. Key personnel
3. Price/cost.
Three contractors, A, B, and C, have submitted proposals. The offer from A has been judged to be unacceptable. Contractor B has a great technical approach and top-of-the-line personnel. Contractor C has an acceptable but less attractive approach, and its personnel just meet government standards. Award will be made without holding discussions.
The offerors propose the following prices:
A. $1 million
B. $2 million
C. $1.98 million.
Contractor A cannot get the award, even though it has offered the lowest price, because its proposal is not acceptable. B cannot get the award because it did not have the lowest price among acceptable proposals. C is given the award.
In a tradeoff procurement, especially one in which the government has made merit factors more important than price, the government could have selected contractor B, which might have been the real best value. Under LPTA, the government must select the lowest price offered among “acceptable” proposals. This is so even if the difference in price is miniscule. In an LPTA procurement, the government must be prepared for a situation in which it may be compelled to award to the “worst acceptable proposal.”
Notwithstanding this one significant drawback, the LPTA approach has a number of advantages. When determining which of the two source selection processes to use for a particular procurement, acquisition planners must consider both the advantages and disadvantages that are inherent in each process.
ADVANTAGES OF LPTA
• Evaluation factors must be established, but they are not assigned relative importance. Each factor is equally as important as any other. This makes preparing a source selection plan less complex and less time-consuming than it would be if a tradeoff process were used.
• Evaluating proposals is not normally as difficult as it would be in a tradeoff process because it is not necessary to variably score or rate competing contractors’ proposals against the government evaluation criteria. Instead, contractors are simply judged either “acceptable” or “not acceptable” on the evaluation factors. Documentation of the bases for these judgments is made a part of the contract file.
• Because award is made to the lowest price or cost among acceptable proposals, the award is relatively easy to document and relatively easy to defend if a contractor protests the choice made by the government.
• The strong emphasis on low cost or price may encourage competing contractors to “sharpen their pencils” and may well result in prices that are lower than those that would have been obtained in a tradeoff process.
• Of the two source selection processes, LPTA is usually less labor-intensive for the government and usually takes less time.
Considering all the advantages to the government—including lower administrative costs and less consumption of time—government planners could reasonably conclude that using LPTA will result in the overall best value to the government for a specific procurement. This may be especially true when acquisition planners anticipate that there will be minimal quality or risk discriminators between likely competitors.
ADVANTAGES AND DISADVANTAGES OF TRADEOFF
• Tradeoff increases the likelihood of obtaining the true best value among competing proposals because it gives the government (the appointed source selection authority) far more flexibility in applying business judgment.
• The procuring agency must establish evaluation factors and determine their relative importance. This normally consumes more planning time than the LPTA process. It must be carefully done, because the government will have to ultimately make business judgments that are consistent with the evaluation factors and their relative importance as set forth in the government solicitation.
• Proposal evaluators must score or rate each competing contractor on each evaluation factor in the solicitation and must prepare supporting rationale. Again, this is more labor-intensive than LPTA.
• Tradeoff is a relatively subjective process, and the source selection authority is given great latitude in choosing a contractor. The law requires only that he or she make a rational (reasonable) decision that is compatible with the evaluation scheme set forth in the solicitation. He or she is expected to exercise good business judgment and to clearly and persuasively document the rationale for award. The source selection authority thus must assume a great deal of responsibility.
• Because individual business judgment is exercised in the award, and because the evaluation process is more complex, there is more opportunity for error, disagreement, and protest when using tradeoff.
Notwithstanding any disadvantages inherent in the tradeoff process, acquisition officials may reasonably conclude that the amount of money involved, the performance risk, and/or the criticality of a particular procurement warrants using this traditional method of obtaining best value. Tradeoff permits the application of reasoned business judgment, rather than the selection of a source by a calculator.
AGENCY GUIDANCE
Some published agency guidance may encourage the use of one or the other of these processes. For example, the Army Source Selection Manual states, “On most acquisitions the tradeoff process will be the most effective and will result in the best value to the government…. In the majority of acquisitions, the LPTA process may not be an appropriate methodology since past performance is not normally considered.” (Note that regardless of the source selection process used, past performance is always considered in responsibility determinations.)
Another agency manual, NAVAIR Instruction 4200.39A, says of LPTA, “It is generally not appropriate for the acquisition of design or development effort, software integration, or professional services.” These and other agency manuals often use qualifying terms, such as “on most acquisitions” and “normally”, so that source selection officials are free to make exceptions to agency preferences.