What is a Non Traditional Defense Contractor?

The current definition of a NTDC is an entity that has not performed (for at least one year) on a DoD contract or subcontract that requires full CAS coverage. The NTDC must also participate significantly on the OTA project.

Therefore, an NTDC must:

  • be an entity
  • without DOD contracts requiring full CAS coverage, and
  • participate significantly on the OTA project

1. An entity’s status is determined based on a number of factors, including its tax ID and DUNS number, how expenses are allocated and overhead rates calculated, responsibility for profit/loss, location of principal place of business, the articles of incorporation, authority to enter into contracts, government policy, regulations, and other business and legal considerations. A parent company can have subsidiary companies, with these being a corporation, partnership, limited liability company or other type of business structure which makes them separate entities.

In addition, the DoD identifies each commercial, nonprofit, or Government entity awarded a government contract with a unique entity identifier (UEI). For DoD, an entity’s UEI is its D-U-N-S number. More than one D-U-N-S number can be issued to a company “provided that they are separate legal entities, or companies that have the same legal business name but have different DBA’s or a different line of business.”  Therefore, one company could comprise different entities.

2. What is full CAS coverage?

Full CAS coverage requires that the business unit comply with all of the CAS in effect on the contract award date. Full coverage applies to contractor business units that received a single CAS-covered contract award…of $50 million or more or received $50 million or more in CAS-covered contract awards during the immediately preceding cost accounting period. DCAA Audit Manual.  Note that in defining the applicability of CAS the DCAA does not use the term “contractor” or “company” but instead, uses “business unit,” thus recognizing that one company may have different CAS compliance requirements.

Therefore, to have NTDC status for an OTA Agreement, an entity must not have a business unit with a  full CAS covered DOD contract (currently or for one year preceding the solicitation for the OTA agreement).

Note: This requirement applies to only procurement contracts and not to grants, cooperative agreements or other transactions. CAS regulations are inapplicable to small businesses.

3. The NTDC must participate to a significant extent. In addition to 1 and 2, an entity must demonstrate that it will be a key participant having significant involvement in the OTA project.

In conclusion, if a company meets these requirements they likely qualify as a NTDC; however, other requirements will need to be met before being awarded an OTA agreement.

This information is provided by Joanne Abbott, Esquire, and is not a substitute for independent legal advice based on your unique situation.

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