In Part 1 of PilieroMazza’s blog series (linked here), we looked at how Other Transactions Authority (OTA) has emerged as a key acquisition tool for government contractors eager to work with the Department of Defense (DOD). In Part 2, we’ll unpack what OTA is, who can participate in these agreements, and where to look for OTA-related opportunities.
What is an “Other Transaction”?
OT generally refers to the statutory authorities allowing the federal government to enter transactions other than a typical government contract—eliminate FAR-based procurement contracts, grants, cooperative agreements, or cooperative research and development agreements, and you’re left with OTA. If DOD could narrow the wide world of OTA down to one word, it would likely be “flexibility.” The flexibility of DOD’s OTA is key to ensuring it reaches some or all of its stated goals to:
- foster new relationships and practices involving traditional and non-traditional defense contractors (NDCs);
- broaden the industrial base;
- support dual-use projects;
- encourage flexible and efficient product design and development;
- advertise DOD’s priorities such that industry aligns and incorporates those priorities into future technologies and products; and
- collaborate in innovative arrangements.
OTA is codified in 10 U.S.C. § 4021 (research OTs) and 10 U.S.C. § 4022 (prototype and production OTs). While OTs can be structured in a variety of ways, the three types of OTs—research, prototype, and production—all fall under these statutes:
- Research OTs are authorized under 10 U.S.C. 4021 for basic, applied, and advanced research projects.
- Prototype OTs are authorized under 10 U.S.C. 4022, which extended the research OTA so that DOD can acquire prototype projects or capabilities.
- Production OTs are authorized under 10 U.S.C. 4022(f), which allows a competitively awarded prototype OT to segue into the production phase without the need for additional competition, assuming other specific requirements are satisfied.
Given the stated purpose of DOD’s OTA and flexible framework for making OT awards, it’s easy to see why the Trump administration’s EOs focused on streamlining defense acquisition and getting rid of the proverbial “red tape” include an express preference for using OTA. The concept is inherently efficient.
Who can receive a DOD OT award?
While OTs are not subject to traditional contract requirements, DOD generally defaults to promoting competition on OTs in lieu of a sole-source OT whenever practicable. Competition is especially important for OTA where flexibility is key, and DOD strongly desires—moreover, actively seeks—participation from NDCs.
Research OTs are generally well-suited for merit-based competitive procedures and, aside from a desire to involve NDCs, 10 U.S.C. § 4021 does not specifically mandate their participation. In fact, as long as the basic, applied, or advanced research project does not duplicate other DOD research and is funded at least 50-50 by government and other sources, DOD has few statutory limits to award a research OT.
Prototype OTs are where small businesses and NDCs stand to benefit from recent efforts to reform defense acquisition, as participation is limited by 10 U.S.C. 4022. At least one of the following three conditions must be met to award a prototype OT:
- there is at least one NDC or non-profit research institution participating to a significant extent;
- all participants in the transaction, other than the government, are small businesses or NDCs; or
- at least one-third of the total cost of the prototype project is to be paid out of funds provided by parties other than the federal government.
Production OTs may be awarded as follows pursuant to 10 U.S.C. §4022(f):
- Award may be made to the prototype OT awardee without additional competition if:
- competitive procedures were used for the selection of the prototype OT award; and
- the prototype OT awardee successfully completed the prototype.
- Award may be made to a consortium if DOD determines that the participants successfully completed an individual prototype or prototype sub-project as part of a consortium.
How do I find DOD OT opportunities?
Your search begins with SAM.gov, but don’t stop there. DOD advises its contracting personnel to advertise information about OTs as widely as possible for maximum reach to NDCs. This includes the agency’s websites and social media platforms (e.g., LinkedIn, Facebook, Twitter, and YouTube), as well as crowdsourcing and market intelligence campaigns (e.g., www.challenge.gov, www.citizenscience.gov, https://afwerxchallenge.com). Further, existing accelerators and consortia have active websites viewable by the public, where they aggregate and post OTA opportunities for members and prospective members. Keep in mind that while this blog is dedicated to DOD’s OTA, several other federal agencies (e.g., NASA, Department of Energy, HHS, DHS, and more) have their own OTA, so there are OT opportunities no matter your business’s area of expertise.
If you have questions about OTA or were impacted by any of the administration’s recent executive orders, please contact Cy Alba, Josie Farinelli, or another member of PilieroMazza’s Government Contracts Group. Stay tuned for next week’s blog on best practices for OTA negotiations, and remember to visit our Government Contract Executive Orders resource center for additional coverage.
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If you’re seeking practical insights to gain a competitive edge by understanding the government’s compliance requirements, tune into PilieroMazza’s podcasts: GovCon Live!, Clocking in with PilieroMazza, and Ex Rel. Radio.
