The Pros and Cons of Other Transactions Authority

I’ve written before that OTAs are growing in use. And with their growth there are more people who seems to be skeptical of their value. And there will be many lessons learned, no matter whether OTAs continue to multiply or if they recede.

OTAs aren’t constrained by all the rules and regulations of the FAR. And unlike a procurement contract covered by the FAR, GAO review of OTA actions are rare because GAO review authority is limited to only complaints that the government agency acted outside of its authority.
The world moves at a rapid pace. Threats to domestic security are real and evolving. Can the speed of OTAs help combat these challenges?
Perhaps – but more understanding of what OTA instruments are and are not is needed.

Here are our thoughts on a few articles – all posted in a relatively short period of time – debating what to do about the changing face of warfare and where OTAs can be leveraged to help protect us.

Interesting OTA Questions

The author of an article posted on Federal News Radio dated February 26, 2018 poses an interesting question.  If OTAs are supposed to be limited to innovative solutions then why do the membership rosters of all the consortia organizations, which function as a conduit facilitating information exchanges between the government and the consortia members, read like a Who’s Who of the top 500 in government contracting?

Here’s our answer to that question.

OTAs are for innovative solutions, many of which come from small companies, either unwilling or unable to comply with all of the traditional contracting rules and regulations. These same small companies are also on the membership rosters with the proverbial “Who’s Who of the top 500 in government contracting”. Both types of consortia members are an integral part of the OTA process.

OTAs were created to give the government a mechanism to negotiate relatively simple, commercial-type contracts with these reluctant companies. Gaining access to the new technologies (from these reluctant companies who wouldn’t agree to a contract subject to the FAR) is only the first step. Once the government acquired the new technology or capability, it must then integrate these innovations into the products, services, and systems that benefit and protect our nation.

Who does this integration?

The “top 500”. They are the producers of vehicles, satellites, communication systems, medical cures, protective garment, and detection sensors that the government buys. They must receive OTA agreements when they partner with these innovative companies to complete the integration process. Therefore, their participation in consortia and OTA transactions is vital.
The author goes on to question if the OTA process is preferable to making the hard but necessary changes to the Federal Acquisition Regulations System. Again, we don’t think this question applies to the OTA process or the resultant agreements. The FAR includes commercial contracting processes already. Even this process, which is comparatively much simpler than the noncommercial contracting process, imposes many restrictive requirements and unwanted compliance risk on these innovators. For the innovators and the traditional contractors to work together to integrate new technologies into existing technologies, Congress saw that it was essential and proper for both to be free of the FAR for the public good. FAR contracts obviously have a place, but even changes to the existing FAR system will not deliver the benefits that OTAs can.

OTA Agreements an Ideal “Toe in the Water”?

In the next article posted on the same site just a few days later:

“All these attributes make OTA agreements an ideal “toe in the water” for government market engagement for cloud and startup companies from Silicon Valley (or elsewhere). It’s simply a fact that many innovative start-ups will not remotely consider contracting with the government given the compliance risk, oversight burdens and loss of control over key assets, especially their intellectual property.”

The author goes on to say, that although the flexibility of OTAs is their broad appeal, he is not a champion who believes the FAR should be lightly disregarded. He cites the thoughtful work of the Section 809 panel whose members have undertaken the task of looking at how the government buys as well as in attempting to streamlining the FAR. Until this day comes, though OTAs might be a solution when combined with other iterative agile procurement processes.

A Revision and a Protest?

Finally, last weekend another article was posted, this time at Federal Computer Week. DOD announced that it had scaled back the initial $950M award to REAN to $65M so that the award is more narrowly tailored to support only TRANSCOM for whom the original prototype work was completed. No additional details were provided. However, from our perspective there are two things of interest here.

First is the issue of follow on production work under the OT authority. It is perfectly appropriate for a sole source OTA to be issued to the organization that successfully completes an initial prototype under a previous OTA. Scaling back the OTA to TRANSCOM appears to be related to the fact that there is a$2B FAR acquisition for cloud services running in parallel. No sense in duplicating efforts.

Second, Oracle has protested the initial award. GAO only has no jurisdiction to hear a protest on an OTA award. However, as mentioned above, GAO does have jurisdiction to determine whether an agency has properly used their Other Transactions Authority. It appears that the government may have scaled back the scope of the OTA as a corrective action in response to the GAO complaint. This is not uncommon. Unlike a FAR contract, OTA instruments often have very flexible values with potential estimated costs covering 5, 10, or even 20 years. Values are often adjusted over time as determined by use.

OTAs Continue to Fascinate

The contracting community at large is experiencing a bit of cognitive dissonance as the use of OTA instruments seems to be increasing. A culture change must occur both in industry and in government if we are to get the most out of the OTA process. Can we create a culture where both processes thrive? What are contracting offices doing to groom Agreements Officers (AOs) and Agreement Officer’s Representatives (AORs)?

I for one am fascinated to see this all play out.

The article is the collaboration of Karla and Joanne. For more information, email Karla at

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