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Determining Fair and Reasonable LPTA

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Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

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1 hour ago, brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Brent,

Let's think this through for a moment - imagine all your circumstances were identical except you only received on offer in response to you RFP...what would you do in that situation?  Would it be possible for you to determine whether or not that single offer has a fair and reasonable price? 

Bob - this question should go in the Beginners Forum. 

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First, let me say I believe that you award to the LPTA because you have competitive pricing, someone disagreed.

Matthew, I would award to them if I can reasonably conclude that the offer was submitted with the expectation of competition.

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See FAR 15.404-1(b)(2)(i).

If you received several proposals in response to your solicitation, you may reasonably assume that the lowest among them is reasonable.  Absent any reason to find otherwise, call it reasonable and move on.

Forget any talk about an expectation of competition in the lowest-price offeror's mind -- don't even go there -- you have real competition.

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11 minutes ago, ji20874 said:

If you received several proposals in response to your solicitation, you may reasonably assume that the lowest among them is reasonable.  Absent any reason to find otherwise, call it reasonable and move on.

Even without knowing whether the other proposals were technically acceptable?

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27 minutes ago, brent said:

First, let me say I believe that you award to the LPTA because you have competitive pricing, someone disagreed.

Matthew, I would award to them if I can reasonably conclude that the offer was submitted with the expectation of competition.

Brent,

Could you finish that line of thought?  Maybe the reason you're running into disagreement is because you're not adequately/fully explaining your position/argument...

Food for thought: Is "competitive pricing" the only way to determine whether or not a price is fair and reasonable?

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2 hours ago, brent said:

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Whether or not prices are fair and reasonable is a separate issue from 'How to LPTA.'  

Let's just focus on LPTA evaluation methodology. There are two typical methodology for LPTA. 

1) Rank responses by price.  Starting with the lowest price, determine if it's technically acceptable.  If yes, stop.  If no, proceed to the next lowest price and repeat.  This is most common methodology in the federal government.  I will die on this hill.  I have conducting training where I discussed this exact topic.  1102s across a dozen (civilian) agencies have said this is, by far, the most common way they 'evaluate.'  I have spoken to 1102s who have told me this is the *only* way they have ever done an evaluation under FAR 8.4 or 13.

2) Evaluate all responses for acceptability.  Select lowest price of the acceptable responses.  My GS-15 mandates use of this methodology for FAR 8.4/12/13 LPTA stuff, despite the protests of staff.

For LPTA Version 1, there is **most of the time** a reasonable assumption that several quotes/offers/responses/etc. received is sufficient competition for price reasonableness **most of the time**, regardless of whether the responses are technically acceptable or not. 

I would note, however, that if its not bordering on self-evident what 'technically acceptable' means, you probably don't want to do Method 1.

When I am pretending to be a CO (when the actual CO is out sick), I would not sign off on 'the expectation of competition' establishing price reasonableness if only one offer was received.  I would refer you to FAR 13-106-3 (a) (2), 15.404, etc. 

 

 

 

 

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17 minutes ago, Matthew Fleharty said:

Brent,

Could you finish that line of thought?  Maybe the reason you're running into disagreement is because you're not adequately/fully explaining your position/argument...

Food for thought: Is "competitive pricing" the only way to determine whether or not a price is fair and reasonable?

My position is that there is no good reason to disregard other proposed pricing in the MATOC pool, even if they all have not yet been determined technically acceptable.  I believed the competitive pricing in my situation determined fair and reasonable.  Someone disagreed.

 

Food for thought:  No, although it is preferred. 

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Generally, we do not include the prices of unacceptable offers in our price analysis. But in the original posting, there has been no finding of an unacceptable offer.  

In an ordering situation using LPTA, the price analysis can occur before the technical evaluation -- compare all the proposed prices received in response to the solicitation (amenable to FAR 15.404-1(b)(2)(i)), and rank offers from lowest price to highest price -- absent a reason for finding otherwise, one may generally assume that the lowest-price among many is a reasonable price.  If the lowest price seems reasonable based on competition, evaluate the low-price offer for technical merit.  In the original posting, the solicitation (under schedule contracts or multiple-award IDIQ contracts) said the agency would look for a technically acceptable offer starting with the lowest-price offer, and stop the technical evaluations when it finds one. 

This discussion might be helpful:

 

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On 9/15/2018 at 1:50 AM, brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Yes, there are several price analysis techniques (see FAR 15.404-1( b )(2)).

LPTA is a source selection process (FAR 15.101-2). As a process, LPTA doesn't necessarily rely on an effective competition as effective competitions relate to price fair and reasonableness determinations.

You might help yourself by clearly explaining what you mean by technically acceptable. Are you talking about an evaluation factor rating; or as in legally acceptable, i.e., legally eligible for award. (The offeror or offer can be unacceptable for many reason, but not all reasons affect price. Remember, as a general rule, a solicitation requirement is "material" if failure to satisfy it would affect price, quantity, quality, or delivery.)

The Contract Pricing Reference Guide states when using proposed prices for comparison:

“any proposed price used as a basis for price analysis must meet the following general requirements: 
•The price must be part of an offer that meets Government requirements. [i.e., Do not use the price from any offer that you would not consider for contract award as a basis for price analysis, nor an offer from a firm that you have determined is nonresponsible.]"

If you want to use the other offerors pricing as a comparison, you should ensure their pricing is acceptable for a comparative analysis. The CO has to ensure comparisons are valid or make adjustments as necessary.

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24 minutes ago, Jamaal Valentine said:

You might help yourself by clearly explaining what you mean by technically unacceptable.

 

Jamaal, the original poster has never written about "technically unacceptable."  We do not want to conflate technically unacceptable with technically unevaluated.  In the original posting, the higher price offers are all technically unevaluated -- the lowest price offer is technically acceptable and has a reasonable price (based on comparison with other prices received from the solicitation, and inasmuch as there is apparently no reason to find otherwise and none of the comparisons are with unacceptable or nonresponsible offers).  

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On 9/14/2018 at 11:50 AM, brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Restating the question : Can the lowest price be considered fair and reasonable if you don’t know whether the price of any other offer reflects a price or cost to meet the contract requirements?  

We don’t know how straightforwardl or technically complex the solicitation technical requirements are, how much effort is required to evaluate an offer, whether the lowest priced offer is technically acceptable (i.e., did you evaluate one or more lower priced offers before you found the one you intend to award to) the range of pricing (e.g., a wide variation, closely priced, etc.) or how many offers were submitted (the extent of interest and competition involved). 

To me, it would depend upon an assessment of how confident you are that the competition reflects pricing to meet the contract requirements. Thus, it would seem obvious to me that some judgement is necessary for such a determination. Blind comparisons may not be meaningful, depending upon the nature and circumstances involved. 

You might realize, for instance,  that you need to evaluate the next one or two lowest priced offers and,  if technically o.k., you can assure yourself that you have reasonable price competition for comparison purposes. 

I think that a contracting professional is expected to use and provide good business judgement. Simply seeking the simplest cookbook recipes, for “one answer to fit all circumstances” doesn’t cut the mustard for me. 

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Brent,

Some people want you to violate your solicitation and continue to evaluate higher-priced offers for technical acceptability even after you have found one at a lowest price.  They are seemingly concerned that the price of your lowest-price offer might be too high, even though they know nothing about your acquisition.  They seem to think that the higher-prices offers you received are likely (or at least possibly) technically unacceptable or are from nonresponsible offerors, and want you to PROVE that is not so — only then, they say, can you decide that the lowest-price (and technically acceptable) offer’s price is not too high.  They want to eliminate all risk, rather than reasonably manage risk.

I believe that price analysis can be made by comparison with other prices received from the solicitation.  FAR 15.404-1(b)(2)(i) says so.  Inasmuch as there is apparently no reason to find otherwise and none of the comparisons are with unacceptable or nonresponsible offers, I’m okay with your decision to call the lowest-price technically acceptable offer’s price reasonable.  I say this because I am willing to trust you professionally and your knowledge of your acquisition.  I reject statements that your approach is a blind comparison.

Are you the contracting officer?  If so, I support your decision.  If you had some reason to find otherwise, you would have said so.  If you are not the contacting officer, and you are unable to persuade him or her that the lowest-price technically acceptable offer’s price is not too high, then he or she has to make some choices — do you open discussions with only this one offer to lower the price (without affecting the technical acceptability rating), or do you violate your solicitation and evaluate all or some of the higher-prices offers, or do you do some unnecessary work to show some other way to determine the lowest price is fair and reasonable, or do you cancel the solicitation and start over, or something else?  

I prefer common sense over pedantry.

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All I was doing was answering the original question, as I rephrased it to what I thought he meant. 

Nobody here knows the context from the details not provided. 

“Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?” 

Can it be “considered fair and reasonable ?” Maybe legally yes, according to the stated solicitation  procedure, although one might not really know one way or the other, . Not enough context known.  It would certainly help if the government had an independent clue. It doesn’t take an acquisition professional to make such a declaration using that method. 

Does it make “common sense” as a generic answer to the stated question?  No.  It depends upon the facts and circumstances.  I’ve had LPTAs where none of the prices were affordable or fair and reasonable. Found out what it took to resolve and did it. You probably would too if you were spending your own  money. 

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5 hours ago, joel hoffman said:

"Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?” 

Joel, how about an answer like "YES, in the context of the original posting, provided the contracting officer has no reason to find otherwise"?

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18 hours ago, ji20874 said:

I believe that price analysis can be made by comparison with other prices received from the solicitation.  FAR 15.404-1(b)(2)(i) says so.

FAR 15.404-1(b)(2)(i) states, “Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).”

In other words, there must be adequate price competition to rely on a comparison of proposed prices.  “Adequate price competition” requires, in part that “Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement…” FAR 15.403-1(c)(1)(i) (emphasis added).  How can you know whether a competing offer satisfies the Government’s expressed requirement if you have not determined technical acceptability?  I do not agree that comparison of proposed prices establishes price reasonableness when only one offeror has been determined technical acceptable.  To do so ignores the requirement that there be “adequate price competition.”

Of course, as others have mentioned, the OP does not have to evaluate all the offers as there are other ways to determine price reasonableness.  In fact, the prices may have already been found fair and reasonable.  This is a TO competition.  Brent, were ceiling prices established and found fair and reasonable when the contract was awarded?  If so, is there any reason those prices would not still be fair and reasonable?

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On 9/14/2018 at 9:50 AM, brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Suppose that you conduct an LPTA process and you've used the technique described and discussed in "STREAMLINING SOURCE SELECTION: A Labor-Saving Approach To Lowest Price Technically Acceptable Source Selection," The Nash & Cibinic Report (May 2009):

Quote

We are always looking for ways to streamline the source selection process, and I recently received a question that reminded us of one interesting way to do so. The question was this: When using the “lowest price technically acceptable” approach to source selection described in Federal Acquisition Regulation 15.101-2, may an agency select the lowest priced technically acceptable offer without evaluating the technical acceptability of all proposals received? For example, if an agency receives 20 proposals, may it identify the proposal with the lowest price, evaluate that proposal's technical acceptability, and, if the proposal is technically acceptable, award the contract without evaluating the technical acceptability of the remaining proposals?

We think the answer is yes, assuming that the agency is planning to award without discussions.

Suppose that you are a contract specialist and you conduct such an LPTA. I am your contracting officer and the source selection authority, and you come to me and say:

We got ten proposals. The lowest priced offeror is technically acceptable, so I recommend award to that firm. The price is $1,570,098.

Being a pedant, and believing that managing is teaching, I askIs the price fair and reasonable?

You say: Yes.

I ask: How did you reach that conclusion?

You say: Because it's lower than all the other prices.

How should I respond to that?

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On 9/16/2018 at 10:19 AM, ji20874 said:

Jamaal, the original poster has never written about "technically unacceptable." 

I should have typed technically acceptable. However, my understanding is that technically acceptable/unacceptable determinations are necessary if the OP wants to rely on a comparison of proposed prices. (At least two findings of acceptable)

What's interesting is the use of 'continuing' … does that mean they have to evaluate the lowest plus one more technically acceptable? The lowest technically acceptable plus one more technically acceptable?

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20 minutes ago, Jamaal Valentine said:

What's interesting is the use of 'continuing' … does that mean they have to evaluate the lowest plus one more technically acceptable? The lowest technically acceptable plus one more technically acceptable?

No.

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14 minutes ago, Vern Edwards said:

No.

I don't think it does either but, I still find the wording odd/interesting. (I presume it's a rephrasing)

On 9/15/2018 at 1:50 AM, brent said:

RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Maybe the actual language offers more info. Maybe the drafter didn't intend the price analysis to rely on a comparison of proposed prices. Who knows?

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1 hour ago, Jamaal Valentine said:

I should have typed technically acceptable. However, my understanding is that technically acceptable/unacceptable determinations are necessary if the OP wants to rely on a comparison of proposed prices. (At least two findings of acceptable)

What's interesting is the use of 'continuing' … does that mean they have to evaluate the lowest plus one more technically acceptable? The lowest technically acceptable plus one more technically acceptable?

No.  I should not have  stated or conveyed that impression.

Strict technical acceptability of another proposal might not be necessary as long as one can make a relevant price comparison. 

Being able to make a relative price comparison would depend upon the context and complexity  of the competition and what you are buying. 

Of course, If you have any other price information, you may well not need to examine another proposal to see if it reflects what you are trying to acquire. 

Edit: For that matter, your method doesn’t prevent you from looking at (e.g., reading or scanning, etc.) a higher priced proposal to see if it’s associated price proposal is meaningfully comparable  to the lower priced one. 

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Here's how the CO determined price reasonableness in the decision I just cited:

Quote

EPA received proposals from ten offerors, including ER. The agency ranked the proposals from lowest-priced to highest-priced, and then conducted a price evaluation to assess the reasonableness of the prices submitted. Specifically, the agency compared the prices to the market average, as well as the independent government estimate....

Footnote 2: The agency calculated the market average by adding the offerors' total proposed prices, and dividing the sum by the total number of proposals received. COS at 1; AR, Tab 4, Revised Price Evaluation, at 1.

 

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