Tag Archives: OTA’s

Other Transaction Agreements (OTA) Best Practices For Success

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NATIONAL DEFENSE MAGAZINE

The intent of OTAs is to leverage commercial technologies for military purposes, improve the nation’s industrial base and allow for more cost effective and affordable solutions without extreme bureaucracy.

Opportunities are available to traditional defense industry partners and nontraditional defense contractors, such as academia, non-profits and other small businesses.

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“Imagine this. The Defense Department had an urgent need for armored vehicles to protect warfighters from new threats during a time of war. By applying a unique and tailored acquisition approach with specific attention to time and similar solutions already available in the commercial marketplace, it successfully started fielding new vehicles only 18 months after identifying the warfighter need.

The program referenced here was the mine-resistant ambush protected vehicle program, which began in 2006. Was the program a success? Absolutely. Was it a risk-free or perfect solution? No. Although the MRAP program was timely in helping mitigate the threat and associated warfighter casualties, there were challenges related to operating field conditions, training, sustainment, transportation and costs. The program, however, ultimately enabled the creation of other military vehicles that are still widely used today and supports how tailored acquisition approaches can produce successful outcomes.

A popular and continuously growing phenomenon within the department is the other transaction authority, or OTA. It permits Defense Department entities to award OTA agreements for research, prototyping and production efforts critical to national security. They are not an acquisition approach or strategy; however, they are flexible options that can support an acquisition approach or strategy.

Given leadership’s priorities for the increased application of adaptive acquisition methods, it is highly likely OTAs will be a key ingredient for success.

OTAs are binding agreements between Defense Department organizations and industry partners that are different than Federal Acquisition Regulation contracts, grants and cooperative agreements. While they are an innovative and flexible option that are not subject to all acquisition laws and regulations, they require vigorous program management.

Here are some points to remember:

OTAs are not new to the department. Although it received limited authority in 1989, the authority has significantly expanded since 2015. As a result, more agencies and industry partners are working together on the agreements. OTAs vastly differ from contracts because negotiations are not limited by FAR-based restrictions and allow for more robust terms between parties. This includes, but is not limited to, intellectual property rights, title to property, payment terms, project schedule or duration, cost or price analysis, financial and project status reporting, disputes, remedies and termination.

Congress specifically provided the authority to foster business flexibility for certain circumstances. Unfortunately, there is not a universal process or checklist for all parties to follow when planning or executing the agreements. This is intentional because universal processes across the department could hinder innovation and expanded industry participation.

Since OTAs will differ between agencies, these entities should individually create and maintain some form of standard business processes to support how to execute them from initial planning through completion. Examples of standard business processes include organizational policies, instructions, directives, guidebooks and standard operating procedures. These resources are foundational for success as they can provide tremendous assistance and value to not only the parties seeking to do business with the defense organization, but also the personnel leading or supporting the process.

There can also be immense benefits for industry partners who have not previously done business with the department. It currently has an “OT Guide” published in November 2018 available to the public; however, it is very broad and not unique to individual DoD organizations. Creating and maintaining standard processes can enable consistent and efficient operations, prevent miscommunication, minimize noncompliance with laws and assist organizations during evaluations or audits.

Since there is not a one-size-fits-all option to execute OTAs, defense authorities and industry partners should be aware of the various options available. Specific to prototype OTs, the most widely used type of OT, there are primarily four options for execution. Figure 1 provides helpful information associated with each option.

Agencies should carefully evaluate all options prior to option selection, depending on the specific need or the entity’s experience with OTAs. Evaluation can be done by market research and other means to effectively support the strategy and objectives. For example, if an organization is seeking a prototype that could be created by start-up companies or existing commercial firms, it may be in the best interest to award an OTA on its own, through the Defense Innovation Unit, or to a consortium.

Alternatively, if an agency is seeking a prototype similar to one another government agency is concurrently seeking through its own prototype OTA, it may be in the best interest — and the most economical option — for it to leverage the other government agency’s agreement. The Government Accountability Office reported in 2019 that the majority of funding for prototype OTAs between fiscal year 2016 and fiscal year 2018 was awarded to consortiums.

Further, the GAO reported that the department — in response to congressional direction — is improving its reports on OTA usage to provide more data and transparency. Given the options available for executing OTAs, it is critical that both defense organizations and interested industry partners are cognizant of the options and their individual characteristics.

Another factor for success is sound planning and identification of technical performance parameters.

Failing to plan is planning to fail. Since parties can negotiate and tailor many OTA elements, it is critical for all parties involved to complete sound planning efforts prior to execution. Also, because they promote “outside the box” business practices, risk management is not a choice, but the backbone of the effort from cradle to grave. Agencies should start planning with a clear needs statement or defined problem supporting a capability gap.

Next, the entity must perform adequate market research and requirements analysis to determine if solutions already exist or whether the capability is possible among industry partners. Adequate market research efforts must consider existing commercial products and practices, technological stability and current similar Defense Department or federal government efforts.

Entities must ensure OTAs will comply with codes, depending on the effort’s characteristics. The agency must collectively and clearly articulate what success looks like and how success or performance will be measured. Is the end game a report as a result of extensive research? Or is the end game follow-on production if the prototype OTA successfully meets the capability gap?

The government shall give full consideration to key areas related to cost, schedule and performance throughout the project’s life since OTAs do not eliminate the need for effective program management. Thus, consideration shall be given to vital technical characteristics or performance parameters, such as cybersecurity, intellectual property, technology transfer, testing, integration, interoperability and life cycle sustainment/supportability. Parties involved should continually ascertain when to continue or terminate the effort based on cost-benefit analysis.

Planning efforts should also encompass the means by which the government will publicize and solicit OTAs. Publicizing activities should target relevant and capable industry partners identified from market research. Solicitation activities must be creative, through fair and reasonable methods, to foster maximum competition. Methods include white papers, commercial solutions openings, requests for proposals, panel pitches, industry days, LinkedIn and Twitter.

OTAs require critical thinking and can be incredibly complex. Besides the many aspects of cost, schedule and performance to be considered and evaluated, they have minimum predefined requirements and are accompanied with unique negotiations requiring advanced levels of business acumen from various perspectives. OTAs are a team sport and should have diverse participation by technical and non-technical personnel.

Standardized OTA training or credential programs are not widely available to Defense Department or industry personnel. Personnel should seek to complete some form of OTA training. Nontraditional contractors should also complete training on the electronic invoicing system that will be used to submit invoices for work performed on OTAs. Invoicing the department can be cumbersome, especially for smaller firms with operations largely dependent on timely cash flows.

OTAs also require sufficient documentation since they have more flexibility and fewer internal controls when compared to other business options. Documentation is also vital to support OTA-related actions were fair, reasonable, transparent and legal. The need for sufficient documentation applies to both government and industry partners.

Appropriate documentation assists organizations in establishing beneficial continuous feedback loop mechanisms to replicate best practices and learn from shortcomings. Documentation also allows independent or unbiased individuals to follow OTA-related business decisions and funding. Documentation is even more meaningful as defense organizations spend greater amounts of taxpayer funds on OTAs and Congress seeks additional details on their usage.

Also, the law requires that all prototype OTs above $5 million include a clause that provides the GAO full access to records. As a result, all parties involved need to make documentation efforts a priority throughout the life of every OTA. Lack of existent or appropriate documentation could cause all the parties to receive undesired scrutiny from

Congress and defense leadership. Congress could also reduce or eliminate the authority if parties do not create or maintain sufficient OTA documentation.

The ability for the nation to maintain a sustainable competitive advantage and efficiently leverage adaptive acquisition methods depends on OTAs. It is all but certain they will continue to grow in popularity.

Although they are a bright and shiny object drawing significant attention from expanded usage, the department, its agencies and industry partners must carefully plan and execute OTAs from cradle to grave.

While they are flexible alternatives, they are accompanied by risks, not appropriate for every situation, and do not have a universal pathway for guaranteed success. OTAs must be treated as a privilege rather than an authority that will remain indefinitely.

Appropriate use in accordance with Congress’ intent could produce tremendous value for the Defense Department and industry partners. Alternatively, inappropriate use could result in inefficient use of taxpayer resources and Congress limiting or eliminating the modernized authority.”

https://www.nationaldefensemagazine.org/articles/2020/4/15/other-transactions-best-practices-to-enable-success

Amid COVID-19 DOD Weighing Security And Other Transaction Agreement (OTA) Controls

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DEFENSE SYSTEMS

OTAs are meant to speed the government buying process and allow DOD to buy new capabilities faster by allowing officials to sidestep competitive bidding in certain cases.

Rapid acquisitions for prototypes and experimental technology will be subject to the Defense Department’s unified cybersecurity standard.

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“In an OTA, in the technical specs, they can actually call it [Cybersecurity Maturity Model Certification (CMMC)] out and say what they want,” said Katie Arrington, DOD’s chief information security officer for acquisition during an April 29 NextGov webinar on CMMC.

OTAs are meant to speed the government buying process and allow DOD to buy new capabilities faster by allowing officials to sidestep competitive bidding in certain cases. But there’s ample worry of potential overuse, which could invite congressional scrutiny.

Arrington’s comments come as DOD has begun pushing for the use of OTAs to find and execute on solutions that can help treat or prevent the spread of coronavirus. Ellen Lord, DOD’s acquisition chief, issued a memo in early April to ease the OTA process by delegating contracting authorities to heads of agencies and combatant commanders during the pandemic.

For example, the Army issued $100,000 contracts for innovative ventilator solutions that could be deployed in rural settings as part of its xTech COVID-19 Ventilator Challenge. The ongoing contest aims to produce 10,000 ventilators suitable for field operation in eight weeks and uses OTAs.

As for cyber concerns, Arrington said because OTAs operate “outside” the Federal Acquisition Regulation and largely benefit small businesses, which can be the most vulnerable when it comes to cybersecurity, CMMC is even more important.

“That’s where we need to ensure that we’re putting those levels of CMMC in,” she said. “If you’re doing some grant work, we do need to make sure the institution or the department or the network that you’re doing this work on understands the risk…Everybody’s vulnerable.”

https://defensesystems.com/articles/2020/05/06/cmmc-ota-cyber-williams.aspx

Pentagon DIU Bringing New Commercial Partners Into The Fold And Expanding

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NATIONAL DEFENSE MAGAZINE

Armed with new contracting authorities and a mandate to help the U.S. military stay head of peer competitors, the Pentagon’s Defense Innovation Unit is bringing new commercial partners into the fold and expanding its technological focus.

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“DIU was launched in 2015 by then-Secretary of Defense Ash Carter to bridge the gap between the military and the nation’s tech hubs. It is headquartered in Mountain View, California, in Silicon Valley, with additional outposts in Austin, Texas, Boston and the Pentagon.

“More and more of what the department needs going into the future is dual-use technology, which means it’s equally or more important in the commercial space as it is for the military. So we’ve got to leverage what’s going on with the tremendous innovation hubs that we have around the country and make sure those companies … are thinking about the Department of Defense,” DIU Director Michael Brown said during a panel at the Reagan National Defense Forum in Simi Valley, California.

The organization has three core mission sets: accelerate commercial technology to the warfighter; boost the military’s capability and capacity by taking on transformative projects that can be scaled across platforms and across the services; and grow the national security innovation base.

Its offices in Austin, Boston and Silicon Valley are focused primarily on commercial outreach, while the one in Washington, D.C., engages with military partners such as service acquisition executives.

“We start with the DoD customer with a DoD problem,” Mike Madsen, DIU’s director of strategic engagement, explained in an interview. “Then we put that out to the tech sector and get the imaginative minds in the tech sector to help solve our problems.”

Over the past year or so, DIU’s hand has been strengthened by a number of initiatives, he noted.

A crucial one was Undersecretary of Defense for Acquisition and Sustainment Ellen Lord’s decision to give the organization new contracting authorities, including the ability to directly enter into other transaction authority agreements that are intended to cut through bureaucratic red tape associated with the Pentagon’s traditional acquisition procedures.

“She delegated that authority so that we could award our own OTA contracts, which is a pretty big deal to continue moving fast,” Madsen said.

OTA mechanisms favor nontraditional suppliers, he noted, “whether it’s a couple of folks in a garage in Minnesota or whether it’s a Fortune 100 company in Silicon Valley that just have never done business before with the department.”

The Defense Innovation Unit has awarded about 150 contracts to 122 nontraditional vendors. Of those, 66 are first-time suppliers to the military, Madsen said.

In the past, high-tech companies in the commercial sector “evaluated the $740 billion defense market and said, ‘No thanks. I don’t want a slice of that. … It’s too complex, it’s too hard,’” he said. “What we’ve represented is a lowering of those barriers to entry, making it easier for those leading-edge technology companies to get their technology to the men and women in uniform.”

Madsen said DIU understands the commercial sector’s faster business cycles.

“We want to move at commercial speeds … and look like a commercial entity to those tech companies” that are wary of doing business with government agencies, he noted.

With other transaction authority agreements, DIU can transition from a prototype contract right into a production contract as long as the prototype contract was awarded under competitive circumstances.

The organization has stood up a defense engagement team and a commercial engagement team. The defense engagement team reaches out to the services, combatant commands and other agencies to learn about their needs.

“Then we put that problem [statement] out to the commercial sector and work with them for proposals and look to award a prototype contract as quickly as we can,” Madsen said. The goal is to award a contract within 60 to 90 days, and then move through the prototyping phase and field new capabilities within 24 months.

Once a successful prototype is developed, DIU’s defense engagement team looks for ways to scale it across the department. An example is a recent effort to use artificial intelligence for predictive maintenance.

An AI prototype developed by a company called C3.ai is capable of reducing unscheduled maintenance for the Air Force by about 30 percent, “which is pretty significant for our mission-capable rates for aircraft,” Madsen said.

“We took that successful prototype to the Army and said, ‘Hey, this works on aircraft, what do you think about trying to prototype on wheeled vehicles?’” Madsen explained.

“We worked a prototype for the Bradley fighting vehicle. Now we’re engaged with the Navy to apply the same concept to not only the aircraft in the Navy, but also shipbuilding.”

The commercial engagement team’s charter, meanwhile, is to pave the way for high-tech firms to enter the defense ecosystem and transition their products into a program of record.

It also reaches out to venture capitalists to gain greater visibility into the marketplace.

“They’re effectively the gateway to hundreds, if not thousands, of companies,” Tom Foldesi, DIU’s director of commercial engagement, told National Defense. “For any particular solicitation when we’re looking for specific technologies, they are … able to point us in the right direction.

“The VCs are always a really valuable source because oftentimes they have line of sight to companies that we might not even know about. They might be in stealth mode, they might not have announced their [funding] rounds. So we can gain a lot of insight into what might be going on in the market that might not be public.”

Being co-located in the tech hubs offers advantages. DIU also has its eye on other tech centers such as Seattle and Pittsburgh, Foldesi noted. The organization has received proposals from companies based in 44 states.

“We cast a very wide net across the country,” he said.

DIU is uniquely capable of reaching out to the commercial sector and venture capitalists on short notice, putting firms on contract and helping to scale solutions across the Defense Department, officials say.

“This is very important because most of the companies are [otherwise] pulled into a labyrinthine system within the Pentagon, and it’s really demotivating,” Foldesi said.

The often-cumbersome nature of the traditional defense acquisition system is one of the reasons why a lot of companies have opted not to do business with the U.S. military. But

DIU posts it solicitations directly on its website, with the aim of moving fast on all of its projects.

“There’s money on the table,” Foldesi said. “Someone will be awarded a contract within a few short weeks or months. And then there’s the opportunity to transition that prototype contract to a program of record.”

Over the past year, DIU has improved its decision-making process for taking on new projects, Madsen noted.

“We’ve really focused on building out that concept of transition much earlier in the process so we know what that transition from prototype to production to fielding that technology to the men and women in uniform really looks like before we’re even down the prototyping path,” he said.

The Defense Innovation Unit also helps companies navigate security and compliance issues.

“Part of the benefit of working with DIU is you have a trusted advisor and partner being able to help you manage through those … potential challenges, which can be quite significant for a company that isn’t used to doing business with the DoD,” Foldesi said.

Meanwhile, the U.S. military is trying to stay ahead of advanced adversaries such as China and Russia.

“In this great era of great competition, we think the tech race is the most important one,” Madsen said.

DIU’s top five technology focus areas are artificial intelligence/machine learning, autonomy, human systems, space and cybersecurity.

“Those are the areas that we see undergoing the greatest rate of change in the commercial sector. We think they also best represent the defense mission set,” Madsen said. “But we’re not just sitting back static on those.”

DIU is now broadening its aperture and eyeing other capabilities.

Foldesi and his team are talking to venture capitalists to get a better sense of the business sectors with emerging technology that might be of interest to the military.

“We’re looking at things like power and energy right now,” including lighter and longer-lasting batteries with faster recharge, Madsen said. Advanced materials, additive manufacturing, communications technology such as 5G, and virtual reality and augmented reality capabilities are other areas of interest.

Another new initiative being pursued by DIU is known as National Security Innovation Capital, or NSIC.

About 92 percent of U.S. venture capital funding currently goes toward software, resulting in an underinvestment in dual-use hardware. As a result, early-stage hardware development companies are in such need of capital that they might turn to foreign investors that will exert influence over their intellectual property, Madsen warned.

“The concern … from our perspective is once that happens, now that technology is probably unavailable to the department,” he said.

A key objective of NSIC is to pump money into critical hardware ventures so that they don’t have to look overseas for funding and endanger the supply chain.

DIU is also overseeing the National Security Innovation Network, or NSIN, which includes universities that aid the Defense Department. The network is growing and developing relationships with nontraditional partners in academia that are not typically involved in generating technology for the military, Madsen noted.

Pentagon efforts to engage with the commercial tech sector have not always gone smoothly. For example, in 2018 Google pulled out of Project Maven — an Air Force machine learning initiative focused on sifting through drone imagery — after employees protested the company’s involvement in aiding warfighting.

However, that case is not representative of the commercial tech sector writ large, DIU officials say.

“In fact, we see the opposite,” Foldesi said.

Madsen noted that a recent solicitation for AI technology generated responses from 50 companies. “To me, that indicates that folks definitely want to work with us.”

Foldesi said overcoming wariness of the Pentagon procurement process is the greater challenge.

“This is why our mission is so critical,” he said. “If we’re successfully able to demystify and de-risk doing business with the Pentagon, people will have perceived us having opened up arguably the single biggest [potential] customer” for some of these new technologies.

As DIU reduces some of the barriers to entry into the defense market, venture capitalists are taking notice, he said.

“You’re seeing a lot more of the top VC firms in the world start to put a little bit more money into defense[-related] startups,” he said. “This is just the start of a trend that we expect to accelerate as it becomes smoother and easier to field your technology within the Pentagon.”

The Defense Innovation Unit’s resources are growing. Its budget increased by about 60 percent between fiscal years 2019 and 2020, Madsen noted.
Brown said the organization has started 60 projects and completed 30, delivering about a dozen new capabilities to the military using cutting edge commercial technology. Total contract values exceed $500 million so far.

Companies doing business through DIU have, in turn, been able to raise more venture capital, he noted.

“For every dollar we provide in a prototype contract, on average, $10 of equity capital is raised,” he said. “We just need more volume in this to get the flywheel effect going.”

https://www.nationaldefensemagazine.org/articles/2020/2/11/defense-innovation-unit-shifts-into-higher-gear

Pentagon “Other Transaction Agreements” (OTA’s) Exploding In Popularity

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https://youtu.be/ynxQcjjyQK8?t=37

NATIONAL DEFENSE MAGAZINE

The agreements are a contracting mechanism intended to cut through bureaucratic red tape associated with the Pentagon’s standard acquisition practices, and help the department tap into innovation from nontraditional suppliers.

The number of OTAs awarded annually from fiscal years 2012 through 2015 hovered around 50, then shot up to a high of 298 in 2018. The average value of each contract increased from $2.4 million to $4.1 million

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“The Defense Department is ramping up spending on other transaction authority agreements, according to a recent report by big data analytics firm Govini.

The 2016 National Defense Authorization Act expanded their application. OTAs are now available for basic, applied and advanced research projects and for prototype projects and follow-on production, noted the Govini report titled, “Evaluating the Innovative Potential of Other Transaction Authority Investments.”

“To ensure U.S. military advantage, it is imperative for DoD to partner with businesses and academia to incorporate innovative technological advancements into military capability,” the study said. “DoD is increasingly using OTAs to leverage commercial technology for research and prototyping.”

Following the change in the NDAA, obligation totals grew by 122 percent, eventually reaching a total of $3.4 billion in fiscal year 2018, according to the report.

Last year, the Army led the way with about $2.5 billion in OTA contract obligations and more than 220 agreements. The Air Force was the next biggest user, followed by the Defense Advanced Research Projects Agency, other defense-wide organizations and the Department of the Navy, according to Govini.

Consortia are major players in this area, the report noted.

“A potential strength of OTAs is the ability for agreements to be entered into with a consortium, which is an organized group typically made up of contractors, nonprofit organizations and academic institutions,” it said. “Consortia allow members to collaborate on specific technology areas and offer the government a pool of stakeholders to help develop new technologies or processes.”

In 2018, about 20 percent of the companies that were part of OTA agreements were affiliated with consortia. Obligations to vendors associated with consortia reached a peak of $1.1 billion in 2017, according to the report.

“The increased use of OTAs … is an example of how DoD was more regularly leveraging commercial technology for prototyping and experimentation,” the study said. “Given that the commercial sector is the driving force generating innovation in a number of key technologies, this is a critical step for DoD to take to effectively compete with great power competitors.”

https://www.nationaldefensemagazine.org/articles/2019/7/9/ota-agreements–exploding-in-popularity

GSA Begins Pilot OTA-like Streamlined Process

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FEDSCOOP

The General Services Administration announced its client support center for acquisitions will use a streamlined process, designed to attract startups, to procure innovative, commercial solutions.

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“As part of a pilot, GSA’s FEDSIM innovation team will rely on the commercial solutions opening (CSO), a solicitation outside the Federal Acquisition Regulation, to acquire technologies and services in the production phase or adapted from existing products from “traditional and non-traditional government contractors.”

“The goal of this pilot program is to provide a streamlined approach for acquiring innovative commercial products and services,” GSA says.

CSO is a recently created tool with simplified contract terms, which Section 880 of the National Defense Authorization Act for fiscal 2017 authorized GSA to create the pilot. It’s similar to the Other Transaction Authority of defense agencies but differs in that it’s not legally binding, GSA says.

FEDSIM will post solicitations from client agencies for specific projects of technical areas of interest as they open.

New technologies, processes, methods, applications, and adaptations at the time a proposal is submitted will be considered.

The CSO process consists of submission of a written solution brief, an oral presentation if applicable, and a request for proposal.

Currently, FEDSIM is accepting briefs for three Defense DepartmentCSO solicitations: AFWERX Hub, Marine Maker and the Joint Artificial Intelligence Center Humanitarian Assistance and Disaster Relief DAMAGE.

The Defense Innovation Unit also uses CSOs to speed up vendor selection for innovative needs.”

Pentagon Takes Big Step to Clarify Other Transaction Authority Rules

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“NATIONAL DEFENSE MAGAZINE”

“Senior Pentagon leaders have been calling for increased innovation, speed and affordability in defense systems acquisition for some time. Occasionally they invoke other transaction authorities (OTAs) to accomplish those ends.

Now the Pentagon has added substance to rhetoric by issuing a new “Other Transactions Guide.” This follows the promulgation on Nov. 20, of two policy memoranda on their definitions and requirements and, the authority to use prototype OTAs.”

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“The new guide rescinds the previous guide of January 2017 which was seriously flawed. The new guide addresses both research OTAs (10 U.S.C. 2371) and prototype OTAs (10 U.S.C. 2371b) erasing an artificial division or stovepipes between the closely related authorities.

The ability to transition seamlessly from prototype to follow-on production means OTAs can be used as the basis for a complete alternative to procurement under the Federal Acquisition Regulation for systems development and fielding. They have also been used in the sustainment and upgrade of legacy systems.

The guide is organized in a clear and user-friendly manner. Highlights include case studies and a glossary with useful definitions. It makes plain OTAs are not just about reaching out to nontraditional contractors — as important as that might be. Traditional defense contractors can participate in prototype OTAs via a senior procurement executive determination, by teaming with nontraditional contractors or in other ways.

The new guide also clarifies some other key points.

There are a variety of pathways to use prototype OTAs — they are neither inherently subject to or inherently exempt from major defense acquisition system rules (DODI 5000.02). They may be executed as middle tier Section 804 acquisitions or in other ways.

The guide stresses the need for a cross functional government team to execute the agreements. Agreements officers need to be well qualified but need not be warranted FAR contracting officers.

The guide does not limit OTAs to a technical definition of “acquisition.” Projects have been structured with no government funding, for example. Research agreements are not limited to the technical definition of “assistance.” The arcane Technology Investment Agreement regulation (32 C.F.R. Pt. 37) receives only passing reference in the guide.

The initiation of an OTA project does not start with a determination of agency needs and requirements description as in FAR 2.101. Rather parsing the problem to be solved and communicating the problem to industry while leaving trade space for a variety of solutions is the preferred approach in such agreements.

Funding for OTAs is not restricted to research, development, test and evaluation appropriations. The decision of what funds are appropriate for a project is independent of award instrument.
The one mandatory proviso in the guide requires notice of the potential for follow-on production to be stated in any solicitation or agreement for a prototype project.

There is no single method for publicizing OTAs. Methods that reach potential performers with relevant technologies and capabilities need to be part of a thoughtful outreach strategy.

Payments can be structured as fixed amounts based on accomplishment of observable technical or programmatic milestones.

One of the case studies addresses the U.S. Transportation Command project that resulted in the Oracle America protest. The guide’s requirement for notice of follow-on production addresses the Government Accountability Office’s criticism of the Army contracting office approach in that case. However, the Defense Department’s definitions and requirements policy memorandum issued Nov. 20 clearly rejects GAO’s narrow and skewed definition of when a project is “successfully completed.”

Successful completion occurs when key technical goals of a project are met, success metrics in an agreement are satisfied, or a particularly favorable or unexpected result justifies transition to production. This is also reflected in the guide’s glossary.

Another case study relates to Global Hawk, an unmanned reconnaissance platform developed as an OTA and Advanced Concept Technology Demonstration. The prototype project was highly successful both in terms of achieving technical goals, speed of development and affordability. However, the “rest of the story” is less sanguine. Once transitioned to the traditional acquisition system requirements creep set in and the focus on affordability was lost. Global Hawk is a cautionary tale that starting a project as an OTA does not immunize it from the “costs too much, takes too long” syndrome of business as usual if transitioned to the traditional system.”The issuance of the new guide and policy memoranda constitute substantive steps in the Defense Department’s embrace of OTAs. However, much remains to be done. The department has failed to heed the call of Congress in section 867 of the National Defense Authorization Act of 2018 to create a preference for using OTAs as well as procurement for experimental purposes (10 U.S.C. 2373).

More critical is its failure to fully comply with subsection (g) of section 2371 mandating it to “ensure management, technical, and contracting personnel involved in” OTAs are “afforded opportunities for adequate education and training” including “continuous and experiential learning…”

The new guide is a big step in the right direction. When armed with proper education and training the defense acquisition work force now has the guidance to use OTAs more effectively. Thinking about problems, potential solutions and win/win scenarios is permitted and encouraged by this guide.”

http://www.nationaldefensemagazine.org/articles/2018/12/7/viewpoint-pentagon-takes-big-step-to-clarify-other-transaction-authority-rules