We’ve previously discussed the major types of contracts that you might run into in the federal contracting space. However, one of the categories that we didn’t cover was LPTA contracts, which was partially due to the restrictions that the FAR created around these contracts in 2021. This made them less common, but we also thought that some of their intricacies warrant a standalone resource — so let’s get started.
What are LPTA contracts?
So what does LPTA stand for? Lowest Price Technically Acceptable (LPTA) contracts are a type of procurement used by government agencies and other organizations to acquire goods or services under specific circumstances (which we will explain further down). In an LPTA contract, the primary evaluation factor is the price of the bid, as long as it meets the minimum technical requirements specified in the solicitation.
This means that offers that exceed the technical requirements but have a higher price may not be considered for award. This is their primary difference from the other types of contracts we discussed, in that LPTAs prioritize cost savings over other factors like the quality or performance of the goods or services being procured.
The main advantages of LPTA contracts pertain to the procurement agency or organization rather than contractors. This is primarily because they save money by selecting the lowest-priced bid that still meets the minimum technical requirements. Additionally, LPTA contracts usually provide a clear and objective evaluation process, as bids are assessed primarily on price and technical compliance, rather than subjective factors such as the reputation or experience of the vendor.
Other potential benefits of LPTA contracts include:
- Typically increases competition – these contracts encourage vendors to compete on cost, which usually leads to increased competition and lower prices.
- Reduces risk – clearly defining the terms and conditions of the procurement process helps businesses manage their risk, which can help to ensure that the procuring agency is protected in the event of any issues or disputes.
However, LPTA contracts also have some drawbacks. For example, by focusing solely on cost, organizations may end up selecting bids that offer lower-quality goods or services. This could result in dissatisfaction among customers or users, and potentially even result in additional costs to fix or replace subpar items. On top of that, vendors may be incentivized to intentionally submit low-quality bids in order to win the contract, which could lead to a race to the bottom in terms of the overall quality of goods and services procured.
Other potential challenges with these contracts include:
- Limits flexibility – LPTA contracts typically have strict rules and requirements, which can make it difficult for organizations to make changes or adjustments once the contract has been awarded. This can limit the ability of organizations to respond to changing circumstances or requirements.
- Can sometimes reduce competition – the focus on the absolute lowest cost may discourage vendors who are unable to offer competitive prices, even if they have high-quality goods or services. This can reduce competition and potentially limit the options available to the agency.
What did the FAR rule change?
As of February, 2021, the FAR (Federal Acquisition Regulation) updated a rule to alter when these contracts can be issued. Since then, LPTA source contracts can only be used when there is minimal or no additional value from proposals that exceed the minimum requirements. Other criteria required to warrant LPTA contracts are that the minimum requirements are able to be clearly defined, in-depth reviews of proposals wouldn’t result in additional value being found, no subjective judgement would be needed to award a proposal, and that the lowest price actually reflects the complete and total costs. Once all of these have been met, an LPTA contract is an available option to the agency looking for contractors.
Best practices for LPTA contract bids
If you’re a vendor and there is an LPTA contract open that you think your company can compete for, there are some best practices that you should follow when bidding to improve your chances of winning the award. Some of these best practices include:
- Carefully review the solicitation – before submitting a bid, it’s important to carefully review the solicitation and all of the requirements and criteria that will be used to evaluate bids. This can help to ensure that your bid is compliant with these and has the best chance of being selected.
- Clearly demonstrate technical compliance – in an LPTA contract, the emphasis is on the lowest price, as long as it meets the minimum technical requirements. Therefore, it is vital to clearly demonstrate in your bid that you are technically compliant and can meet the requirements specified in the solicitation.
- Be competitive on price – as the name suggests, LPTA contracts prioritize the lowest price, so it’s crucial to actually be competitive in your bid. This may require you to carefully evaluate your costs and pricing strategy in order to submit a competitive bid.
- Provide references and examples of past work – to demonstrate your capabilities and expertise, it is a good idea to include references and examples of past work in your bid. This can help to convince the evaluating authority that you are capable of delivering high-quality goods or services.
- Be responsive to any questions or requests for additional information – during the evaluation process, the evaluating authority may have questions or requests for additional information. It is expected that you are responsive and provide the requested information in a timely manner to avoid any delays or issues.
Optimize your federal marketplace presence with FAMR
Figuring out which contracts are most valuable and relevant to your company and then actually bidding on them can be a difficult and complicated process. To help make everything go as smoothly as possible, it’s beneficial to have a partner who knows the federal marketing space and can provide recommendations and guidance.
FAMR’s team of experts has decades of combined experience and we’re always happy to not only answer any questions you might have, but also set you up for success. Whether it’s helping you register with SAM, applying for certifications that can give you exclusive access to contracts, or optimizing how you market your services to agencies, we help hundreds of businesses each year win federal contracts.