By Josh Hillis, Senior Program Analyst at Thompson Gray, Inc.
What are Other Transactions (OTs)?
Other Transactions are common terms that refer to any kind of transaction other than a contract, grant or cooperative agreement. Transactions pursuant to this authority can take many forms and generally are not required to comply with certain federal laws or the Federal Acquisition Regulation (FAR). OTs can include flexible business arrangements to obtain research and development activities for new types of technologies, evaluating technical manufacturing models and prototypes or military utility of current or new technologies. Simply put, OTs are a great avenue for nontraditional defense contractors to do business with the government and can also cut down on cost, time and labor to deliver products to federal agencies.
What is an Other Transaction Authority (OTA)?
Other Transaction Authorities (OTAs) are procurement instruments established in 2015 under 10 U.S.C.2371b. There are three main ways the government and contractors can use an OTA – research, prototyping and production. Research-based OTAs correspond with basic, applied, and advanced research projects. This type of OTA is great for organizations that want to adopt commercial practices or standards, partner with non-traditional defense contractors, and diversify into the commercial sector. The second type is prototype OTAs. Typically, the Department of Defense (DoD) will issue this type of OTA for projects directly relevant to the weapons or weapon systems it wants to acquire or develop. The prototype can be a virtual or physical model. The government will then evaluate this prototype based on the technology, process used, concept, end item or system. The last type is a production OTA, which is typically a follow-on to a prior prototype OT agreement that was competitively awarded and successfully completed.
Why use an OTA?
There are multiple advantages of using an OTA. These types of transactions are flexible, meaning and have more freedom than what is typically allowed in the traditional government acquisition process. OTAs are a special vehicle that specific federal agencies can use to expedite and simplify access to certain kinds of mission-critical technologies. OTAs are also beneficial to use because they allow organizations to focus on technical results and not necessarily the process concerns that are associated with FAR-based contracts. This solution also cuts down on the overall cost of projects and introduces more collaborative efforts and ideas from commercial and non-traditional contractors.
Who can be awarded an OTA?
An OTA can only be awarded to contractors that meet certain criteria. The contractor must be a non-traditional defense contractor (an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation sources by the DoD for the procurement or transaction, any contract or subcontract for the DoD that is subject to the full coverage under the cost accounting standards prescribed pursuant to Section 1502 of title 41 and the regulations implementing such section) or a small business as defined under section 3 of the Small Business Act (15 U.S.C. 632).
The awardee can also be a traditional defense contractor, but at least one of the following must apply: (1) at least one non-traditional contractor is participating to a “significant” extent or (2) the awardee provides a financial or in-kind cost share – typically, a 1/3 cost share is required. The Service Acquisition Executive then makes a written determination that exceptional circumstances justify the use of OTA for the purpose of executing innovative business models or structures that would not be feasible or appropriate with a FAR-based contract.
How to use an OTA?
First, your business must define the requirement and make sure it meets the USC guidance. Once the requirement has been defined, you can work with a consortium that best fits your organization’s program needs. Consortiums are business structures put in place by the government to more effectively execute OT.
Once a consortium is established, government customers may issue calls for whitepapers to the consortium. The government may then select a small number of companies to submit a more formal proposal. Ultimately, the government selects one or more awardees and delivers funding to the selected consortium members through the consortium management organization. The government may also propose new relationships between consortium members without re-soliciting white papers or proposals from the entire consortium. After the award, your organization should monitor the progress of the program prototype and can transition into an OT production contract or standard FAR contract. The OT process grants the authority to pursue a sole source production effort.
Now that you know a little bit more about the OTA process, your business can be more informed and effectively prepared to decide if this process is right for you.
