An Overview of “Other Transaction Authority”
Other Transaction Authority (“OTA”) describes the streamlined procedures that federal agencies may use to procure innovative research or prototypes, without the constraints of a typical contract, grant, or cooperative agreement. This flexibility has made OTA an increasingly popular choice for federal acquisitions in recent years. OTA helps open the door for contractors to partner with the Government in new and exciting areas. OTA allows for much greater speed, flexibility, and accessibility in performing research and prototype projects.
Who Qualifies for Agreements under OTA?
Congressional legislation has granted OTA to five federal departments: The Departments of Defense (DoD), Energy (DOE), Health and Human Services (HHS), Homeland Security (DHS), and Transportation (DOT), as well as the National Aeronautics and Space Administration (NASA). Congress has also specifically extended OTA to certain agencies and programs within these departments, such as the Federal Aviation Administration (FAA, within DOT), the Advanced Research Projects Agency–Energy (ARPA-E, within DOE), the Transportation Security Administration (TSA, within DHS), the Domestic Nuclear Detection Office (DNDO, also within DHS), and certain National Institute of Health research programs (within HHS).
This authority gives the agencies the opportunity to craft procurement arrangements specifically targeted to novel ideas and technologies, without having to shoehorn the process into the complex and often arcane world of traditional government contracting.
DoD Specific Rules on Qualifications
While the procedures for entering agreements under OTA are considerably more flexible than the typical procurement process, there are still requirements for participation that vary by agency. For example, DoD’s OTA is intended to foster partnerships with organizations and markets that do not traditionally contract with DoD. Accordingly, Congress created requirements that facilitate an expanded role for “non-traditional” government contractors. A non-traditional contractor is an entity that is not currently performing (or has not performed for at least one-year prior to the solicitation) either a contract or subcontract subject to full coverage under the Cost Accounting Standards.
Alternatively, a traditional defense contractor can be awarded a project under OTA if it partners with a non-traditional contractor that is participating to a “significant” extent, if the traditional contractor provides a financial or in-kind cost share, or if the Service Acquisition Executive makes a written determination that exceptional circumstances justify use of OTA.
What can be Procured via OTA?
OTA allows agencies to craft legally binding agreements with industry and academia for a broad range of research projects, but the overwhelming majority of recent agreements have been for Research and Development (R&D) and prototyping of new technologies. In many cases, Congress has crafted OTA specifically with such arrangements in mind. For example, sections 861-868 of the National Defense Authorization Act for Fiscal Year 2018 established a preference for OTA agreements in the execution of science and technology prototyping projects. However, not all agencies’ OTA has such constraints. NASA and TSA, in particular, have broad OTA powers, which each has employed for a wide variety of procurement activities.
How Do “Other Transaction” Agreements Work in Practice?
OTAs are on the rise for two primary reasons: 1) their flexibility is well-suited to the less predictable, more accelerated process of innovative R&D, and 2) they are not subject to most standard acquisition laws and regulation from the Buy American Act to the Truth in Negotiations Act. The Competition in Contracting Act also does not apply to most OTA agreements, ensuring that protests are not a concern. Importantly, the provisions of the Bayh-Dole Act relating to patent rights as well as FAR and DFARS provisions relating to agency rights in technical data and patent rights are not applicable to OTA. However, in practice agencies such as DoD still tend to still use such authority as the initial position in negotiating OTA agreements.
Contractors, especially contractors new to the federal space, should be on the lookout for streamlined OTA procedures to pursue research development and prototype opportunities in the federal marketplace.
Watch for the next entry in our ongoing series on Alternatives to Traditional Federal Procurement, in which we’ll explore the potential of “Cooperative Agreements”