Gathering best practices? Here's a worst practice: using the Defense Department's Lowest Price Technically Acceptable (LPTA) procurement approach to evaluate RFPs for systems integration, IT strategy, ERP installation other high-skill efforts.
LPTA was originally designed to purchase items with precisely defined technical requirements, such as office supplies and raw materials. Chosen suppliers met the minimum requirements at the lowest price. But with budgets squeezed ever tighter, LPTA is now being used to procure IT professional services, where disregarding the value of expertise and experience is ludicrous. Predictably suboptimal results stem from flaws such as these:
• Murky minimum technical requirements. When project-specific requirements aren't defined before the RFP is offered, the only specified requirements are the project team's education, experience, certifications, etc. Worse, LPTA procurement rules leave no room for interpretation. When a PMP-certified project manager is required, project managers who have successfully implemented a virtually identical project but lack certification are excluded from consideration. And nonprice criteria are evaluated solely as pass/fail, without credit for exceeding specifications.
• Hiring the cheapest people, not the best team. When the sole RFP focus is cost, suppliers can't afford to assemble teams with an appropriate blend of skills and experience. Projects staffed via LPTA usually end up with the least expensive people meeting minimum levels of education, security clearance and so on. Such people are likely to have trouble with unexpected or complex problems.
• No room for creativity. LPTA-based RFPs are very proscriptive. Suppliers that offer nonstandard approaches to achieving project objectives are rarely able to meet unbending technical requirements. When a creative supplier comes up with a better solution midproject, LPTA contracting rules necessitate an elaborate change process.
• Expensive overruns. LPTA contracts place less emphasis on project requirements, metrics, deliverables and outcomes than do traditional contracts. That makes suppliers less accountable, so they can easily justify expensive change orders. LPTA ignores that a smaller, more experienced team, though better paid, can often deliver at lower cost. Fred Brooks' The Mythical Man-Month observed that the best programmers are often 10 times more productive than the worst ones.
• Disappearing suppliers. Squeezed by LPTA restrictions, many government contractors have cut training, support and facilities to the bone. Some have eliminated nearly all employees and hire independent contractors for a project's duration and no longer. Others have exited the business entirely. Deputy Defense Secretary Ash Carter recently acknowledged that suppliers need "profits and margins to be successful," and if suppliers disappear, the DOD will need to pay higher rates or rehire employees.
The government must learn that IT professional services are not pencils, and agencies should stop attempting to hire IT professionals who asymptotically approach minimum requirements. The private sector, usually more astute, must fight against the insanity of using LPTA for IT professional service RFPs. Comprehensive IT systems involving major business process changes are complex and require skilled, high-functioning teams. Ignore this, and you will get only what you pay for -- and exactly what you deserve.
Bart Perkins is managing partner at Louisville, Ky.-based Leverage Partners, which helps organizations invest well in IT. Contact him at BartPerkins@LeveragePartners.com.
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