“Since 1989, the Department of Defense (and as time has passed, more and more other agencies) has held an interesting form of contracting authority. One that is not subject to the FAR or other such federal regulations. This unusual authority is referred to quite simply as “Other Transaction Authority” (OTA), and any government contractor that encounters it needs to understand that OTA procurements are a whole different beast from regular federal procurements…
As noted above, OTA isn’t necessarily new, it has been around for over 30 years. But its usage has increased greatly since then, particularly in recent years. Initially limited to use by the DoD, it is now used by agencies such as the Department of Energy, the Department of Health and Human Services, the Department of Homeland Security, NASA, the FAA, and even the Department of Transportation. OTA is primarily used by these agencies for research work, although the DoD, NASA, and the Department of Homeland Security use it for prototype development as well. For this post, we’re going to focus on the DoD’s use of OTA as they use it the most and have the most expansive authority to use it…”
“Wait, wait, wait…’generally are not subject to federal laws and regulations?’ Yes, you read that correctly. OTA-based agreements are not subject to the FAR, in addition to many other federal rules that don’t apply. Additionally, this lack of status as a “contract” means that OTA transactions are not subject to Court of Federal Claims or GAO jurisdiction, except where it would impact the award of a contract that is subject to such jurisdiction. See Space Exploration Technologies, Corp. Additionally, offerors can challenge the use of OTA where such authority is improper if the protest is made before bids are submitted. Blade Strategies, LLC, B-416752 (Comp. Gen. Sept. 24, 2018) …”
“In recent years, the use of OTA has expanded greatly. The Center for Strategic & International Studies noted in 2020 that the Army’s use of OTA has increased by 416 percent since 2016. As the Center observes: ‘The evidence suggests that there is a paradigm shift ongoing in DoD as OTAs have become a core element in DoD’s approach to technology acquisition over the last five years. This is clearly seen in the mid-to-late stages of the development pipeline for major weapon systems where OTAs are increasingly replacing contracts. Between FY 2015 and FY 2019, OTAs rose from just 3 percent of DoD’s total R&D portfolio to 18 percent of DoD’s R&D portfolio.’
While the need for flexibility with these sorts of projects is understandable, we, as well as other observers, are concerned with the increased use of OTA. Indeed, DoD internal oversight has noticed that contracting personnel utilizing OTAs have often not properly tracked awards through such a system or consistently awarded using OTA in accordance with applicable laws. The fact that DoD has made such observations gives us hope, however, that the government is recognizing that the balance between flexibility and oversight may have shifted a bit too much towards flexibility, and needed oversight may be coming soon…” Read the full article here.
Source: Other Transaction Authority? What Other Transaction Authority? – A Look at OTA – By John Holtz, March 14, 2022. SmallGovCon.
