What is an Other Transaction?
The statutory authority to award Other Transactions (OT) for research and prototypes was permanently codified by the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 in 10 U.S.C. 2371b (section 2371b). OTs are special, legally binding acquisition instruments that may be used to engage industry and academia for a broad range of research and prototyping activities. OTs are not standard procurement contracts, grants, or cooperative agreements. OTs are generally not subject to the federal laws and regulations that apply to federal government procurement contracts (e.g., FAR/DFARS). The standard government solicitation process does not have to be followed, the agreement (the contract) looks more like a commercial contract, and the terms and conditions can be negotiated among the parties. Contractors (Performers) are not required to follow the government accounting rules and will have the option to propose the use of their own systems and processes. The handling of intellectual property (IP) rights between the parties is also negotiable.
What is Other Transaction Authority?
Other Transaction Authority (OTA) can be used by the federal government to agilely develop, pilot, demonstrate, and evaluate innovative and emerging technological solutions (prototypes) from commercial or academic sources. An OT can also be used to design and implement innovative business models within the government that would otherwise not be feasible. Prototypes are physical or virtual models used to evaluate the technical or manufacturing feasibility or military (operational) utility of specific technologies, processes, concepts, items, systems, or discrete features. Prototype projects may include systems, subsystems, components, materials, methodologies, technologies, or processes. An OT can be tailored to a specific transaction to allow for much greater speed, flexibility, and accessibility in performing research and prototyping activities. OT contracts can be up to $100M (up to $500M with approval by the appropriate authority). OTs can also include up to an additional $100M (for up to two years) for further prototype development or initial production. When used appropriately, OT contracts can lower barriers to attract non-traditional contractors and increase access to commercial solutions for defense requirements.