JAMIS Software

Search Icon View Demo

MENUMENU
  • Products
        • JAMIS Prime ERPProduct Overview
          • Project Accounting & FinanceCost Accounting For Government Contractors
          • Time and Expense ManagementTimesheets, Time Off Management, and Expense Reporting
          • Customer Relationship Management (CRM)Opportunity Lifecycle Management
          • Asset ManagementFixed Assets, Depreciation, and Government Property Management
          • Contract ManagementContract Lifecycle Management
          • Business Planning SuiteBid & Proposal, Budgeting, and Forecasting
          • Distribution ManagementRequisitions, Purchasing, and Inventory Management
          • Dashboards & Business IntelligenceReal-time Reporting, Inquiries, & Dashboards
        • JAMIS HCMProduct Overview
          • Human Resources ManagementHR, Recruiting, Onboarding, Benefits, Compensation, and Learning
          • Payroll ManagementDomestic & International Payroll, & Outsourced Tax Services
        • Industry Specific EditionsProduct Overview
          • Manufacturing EditionProject Manufacturing built for federal government contractors
          • Nonprofit EditionGrant management for federally-funded nonprofits.
        • Company Size
          • Small Business
          • Enterprise BusinessScalable and full-featured solutions for mid-to-large organizations.
  • Services
    • Implementation Services & Consulting
    • Customer Support
    • JET - JAMIS Education & Training
    • JAMIS Cloud Services
    • System Customization
  • Resources
        • Get the JAMIS edge in Government Contracting

          JAMIS is a true cloud ERP system that breaks down barriers and helps drive collaboration and knowledge-sharing across your organization, so your people can do what they do best.

          Why JAMIS?
          DCAA Compliance
          Security

          Resources
          • Webinars & Videos mega menu arrow
          • Whitepapers mega menu arrow
          • Prime Insights Blog mega menu arrow
          • Datasheets mega menu arrow
          • Customers mega menu arrow
          FEATURED CONTENT
          JAMIS Prime 7.0 Release

          JAMIS Prime 9.0 Release

          JAMIS Software Corporation announces the launch of Version 9.0, delivering major enhancements in financials, manufacturing, mobility, and cybersecurity to help customers boost efficiency, collaboration, and control.

          Learn more mega menu arrow

  • Events
    • GovCon Webinar Series
  • Company
    • About JAMIS
    • Company News
    • Management Team
    • Partners & Affiliates
    • Careers
    • Office Locations
  • Contact Us

How Is Lowest Price Technically Acceptable (LPTA) Impacting The Government Contracting Market

Posted by Dan Rusert on December 1, 2015

ltpaFor a few years now, government contractors have had a new challenge to take into consideration when placing bids. Most government agencies are now following a procurement method known as Lowest Price Technically Acceptable or LPTA. Simply put, this practice is about choosing the lowest price instead of the best value.

 This is affecting the government contracting market in different ways:

  • Contractors have to engage in a real price war and undercut each other for a chance to win a contract.
  • Placing low bids to win contracts results in lower profit margins, which is often reflected in low wages for employees.
  • This works for small companies where a single person performs most of the work and is comfortable with a lower profit margin.
  • This is a real issue for new players on this market who have to make incredibly low bids to get their first contracts.

Does it mean the only way to win a contract is to place the lowest bid?

Not really. The real question is how government agencies are interpreting what ‘technically acceptable’ means. This procurement practice was instated to prevent contractors from overcharging for the services they offer. The reasoning is that if another contractor can offer the same service at a lower price, the first contractor must be overcharging. (Read this recent article in Government Executive that talks about why LPTA has a clear but limited place in source selection.)

Contractors have to adapt and look for ways to provide the lowest price over the best value. Contractors have to cut corners wherever they can, which usually means they will use the cheapest supplies they can find and save money by lowering wages. This could end up being more costly and time-consuming for the government since not getting the best value for a project means there might be a need to restructure the contract or to hire someone else to fulfill the contract if the quality of the work provided is too low. (Listen to this recent set of interviews conducted by Federal News Radio at the 2015 PSC Vision Conference about why both industry and the military are starting to see fallout from the over use of LPTA.)

LPTA makes sense in some instances.

No one wins when LPTA is used on projects where value is crucial or when contractors place unrealistically low bids just to win a contract. However, LPTA should not be an issue as long as government agencies understand when to use this procurement method and when to focus on finding the best value. For instance, LPTA makes sense for cleaning services as well as maintenance and operations contracts.

Whether we like it or not, LPTA is here to stay. As a contractor, you will have to face this new challenge and look for ways to place the best bid you can while making sure the profit margin is still worth it.

Topics: Blog

Welcome!

Previous Posts:

Fully-Integrated Quality Management Software to Connect Quality Control with Projects, Operations, and Finance

Turn Your Financial Data Into Useful Business Insights

3 Key ERP Automation Tools That Can Improve Operational Efficiency and Decision Making

Production Costing with Production Orders – Understanding True Profitability for GovCon Manufacturers

facebook twitter youtube linkedin
Copyright © 2023 JAMIS Software Corporation. All rights reserved.
JAMIS Headquarters | 6688 Gunpark Drive, 2nd Floor, Boulder, Colorado 80301
Legal | Sitemap
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Reject
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT