Are OTAs the Thing of the Future?

As it looks to get new technologies developed and into the field as quickly as possible, the Department of Defense has been making greater use of Other Transaction Authority (OTA), a quick-strike contracting mechanism that has gone in and out of fashion since the 1950s, but is now seeing a resurgence.

The Defense Information Systems Agency (DISA), for example, recently awarded a $49 million OTA to Enterprise Services, teaming with four other companies, for DISA’s National Background Investigation Services (NBIS), a shared service intended to combine a number of separate systems to speed up process investigations. The Navy also took the OTA route in awarding Advanced Technology International a $100 million deal to manage work on the Space and Naval Warfare (SPAWAR) Systems Command’s Information Warfare Research Project.

The Defense Innovation Unit-Experimental (DIUx), created in 2015 to foster innovation in partnership with industry, has made extensive use of OTAs, telling Congress earlier this year it had awarded 61 other transaction agreements worth $145 million, with the agreements reached within an average of 78 days.

What both projects have in common are that they involve prototyping new technologies and involve companies that don’t usually work as DoD contractors. They also aim for rapid development and deployment. The Navy contract “will accelerate acquisition and bring non-traditional sources, research and development labs, and industry together to provide new, innovative information warfare solutions,” said Rear Adm. C.D. Becker, commander of SPAWAR Systems Command.

Other Transaction Authority agreements give DoD a fast track to new technologies, allowing them to contract for development of new systems—typically prototypes—while avoiding the constricting requirements of the Federal Acquisition Regulations (FAR), which can slow down the process while increasing overhead. Congress has granted OTA to a handful of Federal departments and some agencies within those departments. Over the years it has been used mostly by NASA and DoD, with DoD’s last real flurry of activity occurring in the 1990s. OTAs are generally limited to research and development projects, but have given DoD and other agencies the ability to tackle new projects that might not have been possible, or at least affordable, through traditional contracting channels.

DISA’s project is one example. “We’re building a first-of-its-kind enterprise system that brings together the complex integration of a number of disparate systems on an unprecedented scale,” Raju Shah, the NBIS program manager, said in a statement, while also citing the agency’s need to involve non-traditional vendors. “We needed to hear from as wide a selection of vendors as possible to understand what was possible and be able to narrow to what’s probable.”

DISA is touting the effectiveness of OTAs, saying the agreements evaded the “bureaucratic paralysis” of traditional contracting by accelerating research and development and allowing DISA to work with smaller companies or academic organizations that don’t have the wherewithal to navigate the FAR and wait out the contracting process.

“Many of the companies we’re dealing with are small start-ups,” said Scott Stewart, technical director in DISA’s Procurement Services Directorate. “They’re innovators, but can’t endure the traditional years-long procurement processes…OTAs give the government flexibility to work outside the traditional process while allowing small businesses to get into the game.”

Although OTAs fit in with DoD’s desire to quickly get new technologies from the drawing board to the field, they aren’t going to replace other larger scale contracting methods. And while they avoid many of the FAR requirements, they don’t go without scrutiny.

The 2018 National Defense Authorization Act, for example, supports DIUx’s innovation efforts with industry and other military research labs, but also requires reports on the unit’s plans and projects. Perhaps the most high-profile use of an OTA came in February, when DoD used it to award a $950 million “production OTA” to non-traditional vendor REAN Cloud to provide cloud adoption services. Following a protest by Oracle, the deal was cut down to $65 million, before the Government Accountability Office ruled in May that it didn’t comply with Federal law and recommended that DoD terminate the deal altogether. Similar reversals over the years have made some military components, such as the Army, cautious about using OTAs too cavalierly.

Nevertheless, the upside of OTAs, particularly with focused research and development projects, make their use likely to remain popular.

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