Something we frequently hear, when talking to those involved in the federal contracting industry, is that just when you think you have a handle on all the different ways federal contracting is run, you find out about another new program, authority, protest, guidance, regulation, or any other possible wrinkle of federal contracting. One prime example of this is that many individuals getting into federal contracting will often be surprised that the FAR is not the only standard that may drive how a procurement activity is handled. As we have blogged about in the past, “Other Transaction Authority” can come into play on certain procurements. The Department of Defense (“DoD”) utilizes this unique type of procurement authority and releases an “Other Transaction Guide” to dictate how this authority will be used. But with all things, only change is guaranteed, and any contractor who thought they knew this unique procurement authority’s ins and outs will need to take another look, as the DoD has just released a revised “Other Transactions Guide” based on industry guidance and regulatory changes.
As discussed in our previous blog, since 1989, the DoD has had an “Other Transaction Authority” (“OTA”), which the DoD has utilized for certain types of procurements more and more over time. The authority for the OTA comes from 10 U.S.C. § 4021 and 4022, and states that the DoD and military may use OTA for research and prototypes “directly relevant to enhancing the mission effectiveness of personnel of the Department of Defense or improving platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or to improvement of platforms, systems, components, or materials in use by the armed forces.” Basically, the OTA is a way for the DoD to get emerging military technology and prototypes outside of the typical FAR procurement framework.
As part of the OTA, the DoD periodically releases something called the “Other Transaction Guide” (“OTG”) discussing all the different aspects of the OTA, how contracting staff are supposed to execute actions under the OTA, and even discuss some of what the DoD phrases as “myths” about the OTA. This OTG gives a great “peek behind the curtain” of the OTA processes used by the DoD. However, despite this transparency there have been criticisms and concerns regarding the OTA expressed over time. Of note, GAO has looked at this authority repeatedly, such as in January of 2016, and then most recently in September of 2022. In its most recent review, the GAO looked at “Other Transaction Agreements” and specifically how the DoD could improve planning for Consortia Awards (basically awards or agreements executed through the OTA to groups of organizations that are focused on certain areas of development or research). In the review, the GAO provided six (6) specific recommendations in which the DoD could improve Consortia awards under the OTA. Which brings us to today.
This month (July 2023), it appears the DoD must have heard the GAO loud and clear, releasing a memorandum that simultaneously issued a new OTG that “addresses changes in statute and regulations, and DoD Inspector General and Government Accountability Office recommendations.” The new OTG will also provide “additional administrative guidance and best practices for reporting, funding, definitions, participation and validation of nontraditional defense contractors, and considerations for use of the OT consortia business model.”
While we do love to discuss all aspects of Federal Contracting in detail, we here at SmallGovCon are also very aware that this is simply a blog, and not a place for legal treatises. Therefore, we will only focus on some of the areas in the OTG that hit on the GAO’s recommendations, as the DoD has seemingly called that out as a focus of their revisions. However, we recommend any contractors interested or involved in the DoD’s OTA, to take the opportunity to be acquainted with the newly revised OTG, as it can be quite the change of pace when compared to your “run of the mill” FAR procurement, and as the memorandum by the DoD suggests, contains quite a few changes within the OTG outside of those related to the GAO’s review.
The GAO’s six recommendations for the new OTG basically boil down to the GAO wanting the DoD to track awards, dollars, agreements, processes, negotiations, and personnel related to consortia agreements executed under the OTA, and a desire for more information to be public regarding them. The GAO found that of the twenty-eight (28) consortia that received awards or agreements for prototyping efforts under the OTA from 2019-2021 (representing $24 billion, nearly two-thirds of all DoD’s prototype OTA dollars obligated), most were established since 2014, and were only managed by one of four organizations. GAO expressed concern that the DoD does not have enough data regarding consortia awards, nor a systemic approach for tracking consortia awards, and DoD contracting staff have limited information available to them when planning consortia awards. GAO appears to hope that their six recommendations will help alleviate these concerns within the DoD’s OTA framework.
Presumably in response to the GAO, this new OTG now devotes an entire Appendix at the end of the OTG to discuss “Use of Consortia in Prototype and Production Other Transaction Agreements.” In that appendix, the DoD discusses a list of “considerations” that contracting staff should consider during the process of “contemplating, awarding and administering” an agreement to a consortia under the OTA. Additionally, the DoD in this appendix generally requires that consortia participants who are awarded an OTA agreement, or that receive funding, to be registered on SAM with a UEI. The DoD goes on to state that any award under the OTA must be reported in the Federal Procurement Data Systems (FPDS), and where there are indirect individual awards under the umbrella of a consortium agreement, the “Government should establish an OT Indefinite Delivery Vehicle (IDV) version of a contract action report”. Finally the DoD goes on to discuss annual data collections, points of contact, competition, approval, training, and issues unique to “consortium managers.” These actions by the DoD in this new OTG would seem to indicate that the DoD at least heard some of the GAO’s requests and is now attempting to address them. That being said, as of the time of this blog post’s writing, the GAO still has all of its six recommendations listed as “Open” indicating that the GAO may still be examining whether the DoD has fully met its recommendations.
As the OTG represents the public facing documentation of another unique contracting process (the OTA), this new revised OTG should be read by any contractors who are interested in possibly doing business with the DoD under this unique contracting ability or that are currently doing business with the DoD under the OTA. As shown in their responsive changes to the GAO’s documentation, this new version of the OTG holds many updates that will need to be considered by contractors, currently utilizing the OTA with the DoD, or those that are simply interested in possibly securing work with the DoD under the OTA.
Questions about this post? Email us. Need legal assistance? call at 785-200-8919.