Lowest price technically acceptable contracts now have some additional regulations regarding their use. After years in the making, LPTA contracts are now only supposed to be used in certain circumstances, mostly relating to purchasing physical resources. David Berteau, President & CEO of the Professional Services Council, says that this kind of contract makes more sense for commodities rather than services.
“If you’re buying a commodity, if you are buying tires or ketchup, there are already standards in place. You can say that standard is good enough, ‘There’s no value to me in getting ketchup that’s better than the standard, so let’s go with the lowest price,’” Berteau said. “In services, that’s almost never the case, that services are so equal across the board. You wouldn’t buy medical services from the lowest price bidder. You probably wouldn’t buy plumbing services from the lowest price bidder. And you also take into account the lifecycle costs that are associated with that bid.”