DoD says ‘OTA,’ industry says ‘Oy’

Just because apocryphal books live outside the Bible doesn’t mean you should never read them. And just because certain buying authorities live outside the Federal Acquisition Regulation doesn’t mean you shouldn’t use them.

The FAR covers a lot, but not everything, including, say Other Transaction Authority (OTA). OTA spending by the Defense Department is growing by triple digit rates, although it’s still a relatively small number. But it worries contractors. It came up repeatedly at this week’s Professional Services Council Vision 2018 conference. Kevin Fahey, the assistant secretary of Defense for acquisition, reassured the mostly vendor audience that “OTA use is not a get-out-acquisition-free pass.”

OTA has a little sister spawned by Section 804 of the 2016 Defense authorization bill. It gives DoD temporary authority to buy rapid prototyping and rapid fielding technologies — rapid, in the latter case, means within five years. The authority expires next September.

So for certain acquisitions, DoD has a lot of leeway to not use the FAR. Not total leeway, though — the government can’t just buy anything using the perceived convenience of OTA. The instrument is intended for prototype technologies and capabilities from non-traditional companies. For sure, those definitions leave a lot of leeway.

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OTA is actually older than the FAR. At an earlier conference this year someone noted that it first appeared in the Space Act of 1958. Then-new NASA needed flexibility to buy things no one had ever bought before. Now everyone knows it. But OTA is also engraved in Title 10 DoD authority. Section 845 of that 2016 NDAA also gave the military services each $250 million in OTA spending permission. So it could top $1 billion.

The growth in OTA comes as the services seek to ingest new, experimental capabilities, and do it fast. FAR acquisitions don’t generally work fast. Just yesterday, Signal magazine reports, Air Force Lt. Gen. John Thompson said Space and Missile Systems Center would be using OTA and Section 804 authority to buy a lot of new capabilities.

Contractors worry that DoD uses OTA to avoid competition. As the Air Force points out to its acquisition workforce, the Competition in Contracting Act does not apply to OTAs. But Air Force brass do say “OTs” for prototypes should be awarded pursuant to competition. Vendors also worry that OTA allows such awards to traditional defense contractors as long as a nontraditional contractor has “significant” participation in the deal. How do you quantify “significant?”

Any PEO worth his or her salt, it seems to me, would want some sort of fly off before proceeding to prototype a technology, even using OTA to buy it.

Contractors are on guard to make sure DoD and civilian agencies (which also have OTA) don’t use OTAs when what they really need is rapid FAR buys in an emergency or contingency. For example, imagine that FEMA needs 25 copiers to send to a disaster zone to process claims. The FAR provides for emergency contracting. An OTA might be fast, but in this situation illegal.

So OTA buys can channel a lot of money. They give the government wide discretion. They don’t have to be competitive. They can go to big companies. No wonder contractors have their antenna up. My sense is OTA isn’t out of control, though. And that DoD isn’t generally using it as a “free pass.” Congress through individual members and through the Government Accountability Office is also watching. With all those eyes on OTA, this powerful buying weapon ought to stay aimed where it’s appropriate.