OTAs (Other Transactional Authority) Agreements

By Pamela Racer, PTAC Counselor at Western Carolina University

The use of OTAs (other transaction authority) agreements were first used in the 1950s by NASA; however, industry blogs are predicting the contracting vehicle to grow significantly in 2019 and the future. Other Transaction Authority (OTA) is the term defined as authority of the Department of Defense (DoD) to carry out certain prototype, research and production projects (10 U.S.C. 2371b). Other Transaction (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. As of the 2016 National Defense Authorization Act (NDAA) Section 845, the DoD currently has permanent authority to award OT under (10 U.S.C. 2371) for (1) Research, (2) Prototype, and (3) Production Purposes.

OTA contracting terms are specifically tailored for research and development. R&D projects sometime have unknown outcomes for what the contract performance may provide. These contracts are often used to prototype and test new solutions to problems. Accordingly, it benefits both the contractor and the contracting agency to work together to determine which requirements and outcomes will be most beneficial for the execution of the contract. It helps for the government to learn the “possible solution offered”, especially from nontraditionally utilized technology businesses. OTAs allow this collaboration; rather than forcing agencies and contractors to abide by the requirements of contract vehicles like the Federal Acquisition Regulation (FAR). Even so, we are beginning to see agencies with other transaction authority use OTAs for contracts that are not traditional R&D contracts.

Currently, 11 federal agencies have other transaction authority. To name a few: NASA, Homeland Security Department, TSA, Health and Human Services Department, and the National Institutes of Health. However, most of these agreements are executed by the Department of Defense. Although OTAs are ideal contracting tools for DoD’s accelerating need for R&D projects to keep pace with other nations and adversaries, most acquisitions “talk” calls for increased potential for other federal agencies to use this contract vehicle to help them get the technologies they need at the speed they desire. Congress has been giving DoD the OTA authorities because it wants the Pentagon to be able to take more risks in acquisition and fail before it spends money building a whole program…then failing.

Experimentation “encourages innovative thinking, not just in developing the technology, but in how you use it. It helps ensure there is mature technology before you start production so that you don’t have those unexpected surprises. It reduces the odds that you are going to spend a lot of money on a program of record that you then have to cancel and have it all wasted,” House Armed Services Chairman Mac Thornberry (R-Texas)..

For additional information on OTA’s and detailed references from this article, please go to:
http://acqnotes.com/acqnote/careerfields/other-transaction-authority-ota

https://federalnewsnetwork.com/acquisition/2017/10/ota-contracts-are-the-new-cool-thing-in-dod-acquisition/

https://federalnewsnetwork.com/fiscal-2019-federal-contracting-playbook/2019/01/a-closer-look-at-the-pentagons-2-billion-a-year-ota-pipeline-2/

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