GAO Declines Jurisdiction Over the “Other Transactional Agreement” Evaluation and Award Process

Evaluation and selection of an offeror for award of an “Other Transactional Agreement,” or “OTA,” are significantly more flexible than a traditional procurement under the FAR. This was at issue recently in GAO case MD Helicopters Inc., B-417379 (Comp. Gen. Apr. 4, 2019), where GAO clarified that it does not have jurisdiction to hear protests regarding OTA award decisions.

Generally, OTAs, are utilized by the Department of Defense for research and development and prototype related projects under 10 U.S.C. § 2371b. Notably, OTAs are not covered by the FAR. Instead, OTAs are intended to be a more efficient and highly adaptable means of quickly securing certain types of high-dollar procurements, usually valued at between $100 million and $500 million.

OTAs come in three flavors: Research, Prototype, and Production OTAs. Research OTAs, as the name implies, are for research and development. Prototype OTAs are intended to create prototypes which can transition into follow-on Production OTAs without competition. Unlike traditional solicitations for goods or services under the FAR, the OTA solicitation process is no where near as regulated and, according to the DoD’s OTA Guide, have included more creative processes like “Tech Demonstrations, Design Sprints, Hackathons, Innovation Workshops, Rodeos, Shark Tank-like presentations, Prize Contests and other similar events.”

Additionally, under 10 U.S.C. § 2371b(d)(1)(A)–(D), OTAs may only be awarded if one of four general circumstances exists:

  1. At least one nontraditional defense contractor (as defined under 10 U.S.C. § 2302(9)) or nonprofit research institution is participating on a prototype project “to a significant extent”;
  2. All significant participants in the transaction other than the Federal Government are a small business or nontraditional defense contractors;
  3. At least 1/3 of the total cost of the prototype project is to be paid out of funds provided by sources other than the Federal Government; or
  4. By permission from the senior procurement executive for the agency.

In the case, MD Helicopters, a small business based in Mesa, Arizona, protested the U.S. Army Futures Command’s decision not to enter into an OTA with MD “for the development of a future attack reconnaissance aircraft competitive prototype,” alleging that the Army incorrectly evaluated its proposal and “otherwise failed to reasonably promote small business participation” under 10 U.S.C. § 2371b(d)(1).

GAO, however, confirmed that it does not have jurisdiction to hear protests related to the award of OTAs. While GAO stated that it may review “a timely pre-award protest that an agency is improperly using its other transaction authority to procure goods or services,” it cannot hear protests concerning “the agency’s evaluation of proposals and award decision, which are not within [GAO’s] bid protest jurisdiction” without statutory authority.

GAO also clarified the meaning of 4 C.F.R. § 21.5(m), which states that “GAO generally does not review protests of awards, or solicitations for awards, of agreements other than procurement contracts.” MD argued that “generally” indicated that GAO could, within its discretion, hear protests of OTA award decisions, but GAO stated instead that “the term is not intended to connote some reserved discretion for GAO to consider hearing cases involving the award or proposed award of an OTA, or other non-procurement agreement.” Instead, the use of “generally”  “connotes that GAO may, in limited circumstances, hear a protest that tangentially impacts an agency’s award or proposed award of other than a procurement contract.” In this case, GAO clarified, it could only hear an OTA related protest if it alleged that an agency “improperly [used] its statutory OTA authority to acquire goods or services that should be acquired via a procurement contract.”

As OTAs are predicted to become more and more common, small business contractors and others should remain aware of the differences between OTAs and traditional FAR based procurements. For questions about OTAs, contact us!