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Other Transaction Authority: A Tool in the Toolbox

Last week, the Department of Defense (DoD) issued a five-year, $950 million award to REAN Cloud to provide cloud adoption services to DoD agencies. DoD utilized its Other Transaction Authority (OTA) for the $950 million award as a follow-on to what was originally an OTA award to REAN for migration services valued at approximately $6 million.

The OTA process enables DoD to enter into agreements with industry and/or academia to provide research and development or prototyping work. In particular, the OTA process provides a means for DoD to access nontraditional vendors, such as those who have not engaged in cost contracting for a period of time. These agreements are not contracts, grants, or cooperative agreements, and they are generally exempt from the rules and regulations found in the FAR or DFARS. Recently, Congress expanded this authority for DoD.

When utilized effectively, OTAs can provide many benefits, including reducing red tape, increasing competition, enhancing DoD access to cutting-edge technologies, and allowing for quick implementation of innovative solutions. As with any procurement decision, however, there are many trade-offs that should be considered, especially considering the fact that the OTA process also can be less transparent than a FAR-based contract.

Although the Coalition supports the use of OTAs, in light of the recent follow-on $950 million award, there are several questions that DoD should address to ensure that its use of this authority is fully achieving its intended outcomes.

  • Has DoD considered the costs of this decreased transparency, analyzing the costs and benefits of the use of the OTA process?
  • As the recent award was a follow-on to a smaller award to provide migration services to TRANSCOM, did the original TRANSCOM award contemplate a follow-on action of this type and size?
  • When awarding an OTA, DoD is required, to the maximum extent practicable, to make use of competitive procedures. What was the competitive landscape for these awards? If the recent award was a follow-on action to the TRANSCOM award, what was the competitive landscape for that award? Considering the size and scope of this award, were other vendors given the opportunity to submit proposals? Moreover, given the size and scope of the follow-on transaction, what is the long-term impact on the competitive landscape for these services?

Since its establishment, the Defense Innovation Unit (Experimental), or DIUx, has awarded 61 pilots worth $145 million. There appears to be a growing demand within DoD and the rest of the Government for acquiring cutting edge technology quickly. Although the Coalition understands and supports DoD’s, and need for these innovative solutions, we believe that, given the nature of the OTA process, the Department should be sensitive to issues, like transparency, as they reinforce the perception of fairness and credibility that is necessary for success.

Finally, this trend towards OTAs demonstrates the need for the Government, as required by current law, to utilize commercial terms and conditions to the maximum extent practicable in its contracts. Traditional contracts, through vehicles, such as the GSA Schedules, GWACs, or as stand-alone procurements, still have value to the Government. Making them easier to use for Government and industry should be a top priority for DoD and GSA.

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