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Lowest Price Technically Acceptable: Functionally Unsustainable

Recent federal policy changes have shifted talent procurement approaches from a focus on best value to one of “lowest price, technically acceptable.” Lowest price technically acceptable, or LPTA, seeks to find the contractor or provider who can deliver the minimum technical requirements at the lowest price. While this idea sounds good in theory (who doesn’t want to pay the lowest possible price?), in reality, it has created some serious problems both for recruiting and for the quality of work being delivered.

What Does Lowest Price Technically Acceptable Mean for Federal Contractors?

The Lowest Price Technically Acceptable (LPTA) approach places an increased burden on contractors to deliver highly specialized services for increasingly low prices. This creates a number of problems that could have far-reaching ramifications:

  • Underbidding—In order to win a contract, some companies will underbid the market value for a job. Large companies can sometimes absorb the cost of a low bid, but many businesses will try to make up the difference by cutting back on 401K insurance or implementing other unsustainable measures. Many won’t be able to absorb the pricing hit and will be driven out of the market.
  • Lower Quality Talent—The best talent in any given industry will command higher pay rates. These are the providers who will guarantee exceptional work, dependable quality, and innovative design. However, LPTA means that their deservedly higher prices will be removed from consideration, and lower quality talent will step in to fill the need. When an agency contracts for targeting program designers or defense technology developers, lower quality talent may deliver catastrophic results.
  • Best Talent Will Move to Private Sector—When highly-skilled workers discover that government contracts consistently underpay, they will move to the private sector in order to receive fair compensation for their work. Companies seeking federal contracts will have difficulty finding and retaining qualified talent, but will still need to maintain low pay rates in order to win work.
  • Recruiting Problems—LPTA and associated underbidding can create serious problems for recruiters. As below-market bids drive the best workers into the private sector, recruiters will encounter difficulty in finding skilled providers to meet project demands. The problem isn’t the availability of quality talent; it’s that the artificially low prices make it unprofitable for these workers to accept government projects. By pushing recruiters to accomplish the same quality work with lower funds, the LPTA policy has created an environment in which available workers with the needed skills either won’t take the job at all or, if they do accept the bid, they will quickly become dissatisfied. As a result, recruiters are sometimes wrongly blamed for failing to deliver the needed talent.

Where Do We Go From Here?

LPTA has effectively shifted the focus from securing the best value to securing the lowest price. This shift has reduced the talent pool to include only those workers willing to take below-market value for their skill sets. At the same time, federal clients still want the same quality work for that lower price, and recruiters often bear the blame when the results fail to meet expectations. The bottom line is that in an already competitive market where qualified workers in fields like IT and engineering are in high demand, LPTA exacerbates the war for talent by adding an extra layer of complexity to the recruiting process and further limiting the available talent resources.

At some point, you will get what you pay for.New call-to-action