The age-old debate of “submitting a technically acceptable proposal and a very aggressive bid leads to a win” is one we hear constantly.
Let’s pause though. Is that really true?
This routinely comes up in Black Hat reviews as a topic of great and enthusiastic debate. While we presume this is partly a product of the PTSD-inducing era of “Lowest Price, Technically Acceptable (LPTA)” or it is a misapplication of LPTA concepts in competitions that are Best Value Trade-Offs. Let’s explore the merit of this belief with *gasp* real analysis.
We selected a sample of contract awards made by the Defense Information Systems Agency (DISA) over the period of 2019 to 2022. We sampled 15 relevant GAO Protests since 2019 to create a reasonable data set to draw out a trend of award decisions. The awarded value of contracts we sampled ranged from $12 million to $1.7 billion.
Why did we select DISA as the target of the analysis? They have significant contract award activity (average of $6.8 billion in actual spend against awarded contracts over the period 2019-2021) so we could expect to sample protests to extract some trends in evaluations.
Core takeaways
Exploring the ever-entertaining GAO Protest Docket yielded some interesting trends and takeaways to characterize the bidding environment. Below is a summary of findings.
- DISA made heavy usage of Best Value Tradeoff evaluation methods instead of using LPTA
- Significant usage of price reasonableness was used
- Independent Government Cost Estimates (IGCE) did not factor heavily in pricing reasonableness allowing bidders having great leeway in pricing
- Total adjectival ratings (Outstanding, Good, Acceptable, etc.) between winners and losers were rarely significantly different with 1-2 strengths making the difference in most competitions
- DISA was rarely impressed with technical and management “differentiators” unless clearly stated and successfully illustrated as “above and beyond solicitation requirements”
- On occasion, proposals with lower evaluation scores won, but this forced pricing discounts well in excess of 22% or more and the winner had to be nearly identical in evaluation scores vs. other bidders
- When adjectival ratings were nearly identical, pricing discounts only won in half of the situations
Full stop. Let’s process that statement again.
When adjectival ratings were nearly identical, pricing discounts only won in half of the situations?!
This is important. Yes, in half of the competitions sampled, pricing discounts (compared to losing bidders) clinched victory when evaluation scores were essentially identical. Note that half is not the same as mostly all or all. Let’s continue down the path to understand this further.
Pricing, Pricing, Pricing!
Consider a visual representation of evaluation trends vs. pricing disparities of winners and losers.
Takeaways from Figure 2:
- The “cheap” bids won sometimes if their scores were mostly equivalent, but they offered significant pricing discounts
- When only minor differences in adjectival ratings were given, there was significant variance in pricing premiums (awards with higher prices) and pricing discounts (awards go to lower prices) covering ranges from -39% to 30%
- When there was a (overall) full adjectival scoring difference, pricing premiums allowed could be 20% or more with some level of consistency
This difference is highlighted to demonstrate that the belief held that “lowest price and technically equivalent” is not absolute by any measure. In fact, that was only the case about 50% of the time.
Typical strengths and weaknesses
Beyond the inevitable pricing aspect of evaluation, what led to those adjectival ratings?
DISA applied strengths when proposals clearly defined:
- Understanding and mitigation of risk in performance
- Direct familiarity with DISA equipment and DoD infrastructure
- Clear connection of approach with quantifiable description of benefits such as:
- Cost reduction
- Maximize uptime
- Reduction of risk
DISA applied weaknesses when proposals relied upon:
- Commercial or industry standard practices
- Repeating back solicitation requirements stating you will comply
- Dedicated transition managers to ensure transition…DISA was not impressed
- Relying on partners to carry major functions (recruiting, core technical tasks) or past performance…this is risk
- Claiming incumbent knowledge without illustrating why it matters
What should you take from this summary? Broad claims with no clear connection of quantifiable benefits lead to weaknesses. If you like losing, keep doing that. If you like winning, connect the approach with benefits.
What should you do next?
Bear in mind that this was an analysis we executed using DISA as our “crash test dummy.” Will these conclusions and exact trends always hold true? Of course not. The point is for us to re-consider our assumptions. Do not assume that it’s all really LPTA. Do the analysis. Of course, we can always help you, too. 😊
FedSavvy Strategies Takeaway
- Lowest price and “acceptable” proposals did not enjoy consistently favorable levels of success
- When significantly different technical evaluations occurred, pricing premiums were absolutely allowed
- Not bearing in mind that a “low price shoot out” mentality may very well have you leave money on the table
- When narrow differences in technical and management evaluations occurred it was about 50/50 in terms of allowing pricing premiums or discounts to clinch the win
- Vague claims and poorly articulated benefits are not good enough to win just based on aggressive pricing approaches
- Lower rated proposals can win, but only with steep discounts at (in this case it was 23% or more)
Bear in mind that we are NOT stating the analysis here using DISA contract decisions is indicative of how every situation will work in every agency. Of course this will vary by agency, but the point is to make you think about this widely held belief!
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