Other Transaction Authority (OTA)

Posted on August 24, 2020 Alternative Contracting Methods

OTA’s are becoming the vehicle of choice for Government agencies to quickly contract for innovative technology.  Though popular, there is still a bit of mystery that surrounds them.  For example, OTA’s are not defined in the Federal Acquisition Regulation or in the statute.   Rather, 10 U.S.C. 2371 describes what they are not:  a procurement contract, grant, or cooperative agreement.   Certainly, however,  they are an agreement between the government and a contractor to provide the government goods or services for research, prototypes, or follow-on production.

OTA’s have a rich history.  The National Aeronautics and Space Administration (NASA) pioneered the first use of OTs following the enactment of the National Aeronautics and Space Act of 1958 (Pub. L. 85-568) Since then, the term has generally been used to refer to the statutory authorities that permit a Federal agency to enter into transactions other than contracts, grants, or cooperative agreements. In 1989, Congress codified title 10, United States Code (U.S.C.), §2371, providing the Defense Advanced Research Projects Agency (DARPA), and later others within DoD the authority to enter into Research OTs. Section 2371 was later amended by section 845 of the National Defense Authorization Act (NDAA) for FY 1994 to expand the original OT authority and to allow DARPA, and later others within DoD, to carry out “OTs for prototype projects.” In 2015, this OT for Prototype authority was made permanent and codified at 10 U.S.C. §2371b.

The OT authorities were created to give DoD the flexibility necessary to adopt and incorporate business practices that reflect commercial industry standards and best practices into its award instruments. When leveraged appropriately, OTs provide the Government with access to state-of-the-art technology solutions from traditional and non-traditional defense contractors (NDCs)L, through a multitude of potential teaming arrangements tailored to the particular project and the needs of the participants.

According to the Other Transaction Guide of 2018, OTs can help:

a.  Foster new relationships and practices involving traditional and NDCs, especially those that may not be interested in entering into FAR-based contracts with the Government;

b.  Broaden the industrial base available to Government;

c.  Support dual-use projects;

d.  Encourage flexible, quicker, and cheaper project design and execution;

e.  Leverage commercial industry investment in technology development and partner with industry to ensure DoD requirements are incorporated into future technologies and products; and

f.  Collaborate in innovative arrangements

OTA’s can be used if one of the following apply:

a.  At least one nontraditional defense contractor significantly participating in the project;

b.  All significant participants are small businesses or nontraditional defense contractors;

c.  At least one-third of the total cost of the prototype project is provided by nongovernment participants; or

d.  The senior procurement acquisition official provides in writing an explanation of the exceptional circumstances justifying an OT.

Follow-on production can only be conducted when:

a.  The underlying prototype OT was competitively awarded, and

b.  The prototype project was successfully completed.

Other Transaction Guide, November 2018 Version 1.0
Department of Defense Use of Other Transaction Authority: Background, Analysis, and Issues for Congress, February 22, 2019.