In summary, Other Transaction Authorities (OTA) and Phase III SBIRs have different underlying statutory authorities. The SBIR is a program that may result in multiple transactions, whereas an OTA is a single transaction. For example, an OTA is an agreement entered into by agencies and other entities to carry out specific purposes identified in the statutes that permit the agency to enter into an OTA. A Phase III SBIR may be awarded to any business large or small that conducted the Phase I/II researh either as a small business or a successor in interest (example a large business acquires a small business). OTAs can be awarded without regard to size.

Important Note: an OTA is a procurement authority that allows federal agencies to enter into agreements with non-traditional defense contractors, such as small businesses, research institutions, and nonprofit organizations.

Yes. While many regulations governing federal contracts do not apply to OTAs (such as the Federal Acquisition Regulation (“FAR”) and the Competition in Contracting Act (“CICA”)), the Procurement Integrity Act does apply and as such, competitive practices are applicable to OTA solicitations.

Yes. An SBIR is just a normal contract.

The government uses Federal Acquisition Regulations and Defense Federal Acquisition Regulation Supplements federal contracts as a procurement mechanism to purchase property or services for its direct benefit or use. These contracts are governed by strict terms and conditions, including clauses from the FAR and agency-specific FAR supplements.

You can find the full text of the FAR, codified in Parts 1 through Parts 53 of Title 48 within the Code of Federal Regulations. Each part is divided into subparts, which are then divided into sections, subsections, and regulations implementing such section.

These clauses outline the way members of the acquisition workforce should plan, form, and administer their contracts. Parts 1 through 51 cover different types of information, including contract:

In addition, Parts 52 and 53 contain standard solicitation provisions, contract or subcontract clauses, and forms.

Other Transaction Authority (OTA) is the term commonly used to refer to the (10 U.S.C. 4021) authority of the Department of Defense (DoD) to carry out certain prototypes, research, and production projects. Other Transaction (OT) authorities were created to give DoD the flexibility necessary to adopt and incorporate business practices that reflect commercial industry standards and best practices into its award instruments. As of the 2016 National Defense Authorization Act (NDAA) Section 845, the DoD currently has permanent authority to award OT under (10 U.S.C. 4021) for (1) Research, (2) Prototype, and (3) Production Purposes.

(1) Research Purpose (10 U.S.C 4021) allows for basic, applied, and advanced research projects. These OTs are intended to spur dual-use research and development (R&D), taking advantage of economies of scale without burdening companies with Government regulatory overhead, which would make them non-competitive in the commercial (non-defense) sector. Traditional defense contractors are encouraged to engage in Research OTs, particularly if they seek to adopt commercial practices or standards, diversify into the commercial sector, or partner with Non-Traditional Defense Contractors.

(2) Prototype Purpose (10 U.S.C. 4022) allows for projects directly relevant to weapons or weapon systems proposed to be acquired or developed by the DoD.

The statutory authority provides that Other Transaction (OT) shall be used to: “carry out prototype projects that are directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or to the improvement of platforms, systems, components, or materials in use by the armed forces.”

(3) Production Purpose allows for a non-competitive, follow-on OTs to a Prototype OT agreement that was competitively awarded and successfully completed. This statute requires that advanced consideration be given and notice be made of the potential for a follow-on OT; this is a necessary precondition for a follow-on Production OT. As such, solicitation documents and the Prototype OT agreement shall include a notice that a follow-on Production OT is possible.

The Purpose of OTs authorities was to give agencies the flexibility necessary to adopt and incorporate business practices that reflect commercial industry standards and best practices into its award instruments. When leveraged appropriately, OTs provide the Government with access to state-of-the-art technology solutions from traditional and non-traditional government contractors, through a multitude of potential teaming arrangements tailored to the particular project and the needs of the participants.

The awardee is a non-traditional defense contractor OR a small business:

The awardee is a traditional defense contractor, but at least one of the following applies:

The terms “prototype” and “prototype project” are not defined in statutes or regulations. However, in 2002, the Under Secretary of Defense for Acquisition, Technology, and Logistics stated:

“With regard to section 845 authority, a prototype can generally be described as a physical or virtual model used to evaluate the technical or manufacturing feasibility or military utility of a particular technology or process, concept, end item, or system. The quantity developed should be limited to that needed to prove technical or manufacturing feasibility or evaluate military utility. In general, Research, Development, Test & Evaluation (RDT&E) appropriations will be appropriate for OT prototype projects.”

Other Transactions are a great tool that should be utilized to the fullest extent possible but may not be the best option. The following is a list of where using an OT is best.

DoD Instruction (DoDI) 5000.02 determines whether or not OTs are subject to it based on the acquisition plan chosen by the program office. OTs are neither automatically subject to DoDI 5000.02 nor free from it. Instead, choosing the award instrument should be seen as a different but related, choice. As a result, any program executed under the DoDI 5000.02 pathway is subject to DoDI 5000.02 policy, regardless of whether an OT or traditional contract is used, once this pathway is selected.

OT consortiums are business structures put in place by the government to execute OT more effectively. OSD guidance states that contracting officers should not use specific templates for designing such structures. The intent, rather, is for the government to structure business arrangements that are most appropriate for each specific scenario.

Once a consortium is established, government customers may issue calls for whitepapers to the consortium. The government may then select a small number of companies to submit a more formal proposal. Ultimately, the government selects one or more awardees and delivers funding to the selected consortium member(s) – typically through the consortium management organization. The government may also propose new relationships between consortium members without re-soliciting white papers or proposals from the entire consortium.

Government agencies use OTAs to attract technology firms that tend to avoid DoD business due to the lengthy and complicated FAR-based government acquisition process.

This allows the government to leverage the private sector’s R&D investments in commercial processes and products to facilitate their defense purposes. In addition, other benefits of OTAs include:

While OTAs can take many forms, most are used to build systems prototypes outside of the Federal Acquisition Regulations. They’re especially ideal for creating and promoting new technologies from nontraditional sources. There are three main ways that the government can use an OTA. Let’s take a look at each.

A research-based OTA applies to basic, applied, and advanced research projects.

Used to spur dual-use research and development (R&D) efforts, it does away with the regulatory overhead often included in government contracts. This allows companies to remain as competitive as possible, even within the non-defense, commercial sector.

Traditional defense contractors should engage in research-based OTAs if they want to do the following:

The DoD can issue a prototype OTA for projects directly relevant to the weapons or weapon systems it wants to acquire or develop.

To align with statutory authority, these projects must meet one of the following missions:

The prototype itself can be a physical or virtual model. The government will use it to evaluate the functionality or military utility of a:

Once a Prototype OTA is successfully awarded and completed, a Production Purpose OTA can be added as a non-competitive follow-on to the contract. If an agency anticipates the need for a Production OTA, it must give advanced consideration and notice. This is why, during the period preceding the solicitation, OTA solicitation documents, and Prototype OT agreements include provisions explaining the possibility of a Production OTA.

Commercial Solutions Openings (CSO) is a “solicitation method” that can use either a non-FAR or FAR-based solicitation method and can use either a OT contract or FAR-based fixed-price contract (but not cost-reimbursable).

An OTA is a powerful and extremely useful tool that, if executed correctly, brings many benefits. A few of the benefits are:

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