The Department of Defense and Other Transaction Authorities

Other Transaction Authorities, commonly known as OTAs, have been in use since the 1950s, but only recently have they become “critical to rapid prototyping in the defense realm,” according to Washington Technology.

Other Transaction Authorities are a business tool allowing procurement through means other than by the Federal Acquisition Regulations; in other words, as defined by Oles Morrison, OTAs describe “streamlined procedures that federal agencies may use to procure innovative research or prototypes.”  Other Transaction Authorities thereby give the Department of Defense and military services a much more efficient acquisition process—saving years of red tape and potential protest—and have drawn much praise and excitement; however, OTAs have also drawn criticism for lacking quality screening and fairness.

Other Transaction Authorities have helped the military accelerate innovation in all sorts of functions, especially in the IT field where the evolution of technology vastly exceeds the pace of a traditional acquisition process using Federal Acquisition Regulations. According to Air Force Director of IT Acquisition Process Development Maj. Gen. Sarah Zabel, some vendors have brought in their ideas and have been given a contract the same day. With the ability to procure needed services as soon as possible rather than services which were needed months or years ago, OTAs have found a lot of popularity in the defense realm for their speed. Additionally, OTAs have proved very useful in engaging small businesses and other non-traditional defense suppliers, diversifying the acquisition portfolio as Department of Defense OTAs must use a non-traditional defense contractor, have all of its participants be small businesses, or have at least a third of its total cost paid by parties other than the government.

Taking advantage of the efficiency, flexibility, and accessibility afforded by Other Transaction Authorities, the Department of Defense’s use of OTAs has grown exponentially from less than $500 million in 2013 to more than $2 billion in 2017. However, Other Transaction Authorities have also received their fair share of criticism.

Strictly speaking, Other Transaction Authorities are not subject to the FAR or DFARS and not subject to procurement statues; they are simply contractual actions. Thus, criticism of both lack of public transparency and proposal integrity weighs heavily, considering the transparency of typical acquisitions. Likewise, the award process draws concern: Just this year, the Government Accountability Office ruled in favor of Oracle America, which argued that a follow-on OTA was made without adequate notice or competition. Therefore, the GAO will review OTA usage, a win for OTA detractors. However, the GAO will only review an agency’s award decision to assess whether the agency was correct in choosing to use an OTA over traditional procurement contract; protesting an agency’s award decision after proper use of OTA is still unprecedented.

Other Transaction Authorities are becoming more widespread, growing as a percentage of defense contract dollars, but going into the future, OTAs will most likely not replace the traditional acquisition process. Traditional acquisitions based on FAR and DFARS have provided many effective services and tools before, and many future services and tools will need to be procured through a process that draws heavily from standardized, well-known regulations. At the same time, OTAs are a tool that can create flexible and fast provision of innovative services. Therefore, federal agencies including the Department of Defense will continue to use both traditional acquisitions and Other Transaction Authorities, for some situations call for quality and transparency while others call for speed and flexibility.