In the world of government contracting, there's a growing buzz around Other Transaction Authorities, or OTAs. These are contracts that are different from the traditional Federal Acquisition Regulation (FAR)-based contracts, and they come with a unique set of rules and advantages.
This blog is a summarized excerpt from a breakout session presented at the 2023 GCP Summit. The presenters were Derek Boyd, Partner at Baker Tilly and DJ Halpus, Senior Manager at Baker Tilly. Their topic: “Unraveling the Mysteries of Other Transaction Authority Proposals”.
A Glimpse into History
OTAs didn't just appear overnight; they have a rich history dating back to the late 1950s during the space race. NASA, created to help the U.S. government catch up to Russia in the space race, played a pivotal role in introducing OTAs. These agreements were instrumental in bringing different companies into the fold and advancing technology, ultimately leading to the U.S. landing on the moon.
The concept of OTAs expanded in the 1980s when the Department of Defense (DOD) and DARPA gained the authority to use them for advanced research. The 1990s saw more agencies adopting OTAs, even for prototypes. In the 2000s, OTAs were extended to include production, and by 2016, their use expanded immensely due to concerns about falling behind technologically, especially in comparison to China.
The Purpose of OTAs
- Speed of Contracting: OTAs are known for their agility in contracting. They enable the government to acquire technology and solutions more quickly.
- Flexibility: OTAs provide flexibility in contract types, scope of work, and contract structure, allowing contractors more leeway in developing innovative solutions.
- Problem Solving: Unlike traditional contracts that focus on what to buy, OTAs center around solving specific problems. They encourage innovative problem-solving approaches.
- Inclusivity: OTAs aim to involve a broader defense industrial base, including non-traditional defense contractors and small businesses, fostering innovation and competition.
The Growth of OTAs
The use of OTAs has been on the rise, with significant funding flowing through these agreements:
- In 2016, OTAs accounted for approximately $1 billion.
- By 2018, the value had grown to $2.7 billion.
- In 2019, OTAs reached about $8 billion.
- In 2020, OTAs doubled in value, largely due to COVID-related spending.
While precise numbers for 2021 and 2022 aren't available, it's clear that OTAs have become a vital component of government contracting.
Consortia: The Heart of OTAs
Consortia play a crucial role in OTAs:
- Consortia often include both traditional and non-traditional defense contractors.
- They allow multiple organizations to collaborate on solving specific problems.
- Funding limits are determined by agreements officers, and the significance of participants may vary from one OTA to another.
- Consortia-based OTAs encourage sourcing and teaming to address complex challenges effectively.
- Within OTAs, multiple organizations often collaborate via consortia.
- A managing firm within the consortia serves as the primary point of contact for agreements, though not contracts.
- The consortium agreement outlines how tasks and responsibilities are divided among members.
- Given the complexity of OTAs, effective consortium management is crucial for risk management.
Flexibility in Scope of Work
- One of the key advantages of OTAs is the flexibility in developing the scope of work.
- Unlike traditional FAR-based contracts, OTAs allow for collaboration with contractors to define and refine the problem and solution.
- Contractors may identify problems and propose solutions, fostering innovation.
Regulations and Evolution
- OTAs were historically governed by U.S. Code 2371 before transitioning to 4021 and 4022.
- The objectives of OTAs include offering flexibility, resource sharing, and addressing specific problems.
- OTAs expanded from research to include prototyping and eventually production in the 2000s.
- Production under OTAs is limited to $100 million, which influences their usage for advanced technology projects.
OTAs are gaining prominence in government contracting due to their speed, flexibility, and problem-solving focus. They have a rich history dating back to the space race era and have evolved to become a vital tool in maintaining technological leadership. Consortia-based OTAs are instrumental in bringing together diverse organizations to tackle complex challenges. As the contracting landscape continues to evolve, understanding OTAs and their applicability is essential for both traditional and non-traditional defense contractors. Stay tuned for our future posts, where we'll explore best practices in pre-award and post-award phases of OTAs.
This is just a high-level overview of how the discussion went regarding OTAs at the 2023 GCP Summit. If you’d like to actually be part of the discussion and hear about topics such as this first-hand, start making plans to attend the 2024 GCP Summit in America’s finest city… San Diego, CA!