Government Use of Other Transaction Authority (OTA) in 2022

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A growing buzz term in Government Contracting over the past several years has been Other Transaction Authority (OTA) or Other Transaction (OT). Chances are if you work in the government contracting industry you have heard the term. Since the 2015 and 2016 NDAAs Congress has made several adjustments to clarify and expand the use of OTA. For example, in FY 2018, Congress enacted a law requiring the DoD to prefer the use of OTs for science and technology and prototype programs.

Most of the OTs the public will see are run with a consortium-based model, in which an intermediary third-party firm (consortium manager) forms a consortium usually focused on a specific technology focus area and acts as the facilitator for the government-industry interactions. These consortia are marketed as a more efficient and lower barrier to entry way to work with the Department of Defense and Civilian Government agencies.

A comprehensive list of all the OTA consortia is hard to come by, but this list by MITRE’s AiDA (Acquisition in the Digital Age) is typically up to date. Benefits for small businesses participating in these consortia can include increased visibility with government and prime customers, faster funding, more teaming opportunities, and cost share requirements that incentivize large prime contractors to work with non-traditional small companies.

The increase in spend on OTs is not surprising considering an OT approach allows government to get money out the door faster than traditional FAR contracting and gives the government substantially more flexibility when forming business arrangements with industry members. Jon Harper summarized the explosion of growth in the use of OTAs in a 2019 article in National Defense Magazine 

“The 2016 National Defense Authorization Act expanded their application. OTAs are now available for basic, applied and advanced research projects and for prototype projects and follow-on production, noted the Govini report titled, “Evaluating the Innovative Potential of Other Transaction Authority Investments.”

“To ensure U.S. military advantage, it is imperative for DoD to partner with businesses and academia to incorporate innovative technological advancements into military capability,” the study said. “DoD is increasingly using OTAs to leverage commercial technology for research and prototyping.”

Following the change in the NDAA, obligation totals grew by 122 percent, eventually reaching a total of $3.4 billion in fiscal year 2018, according to the report.”

Rolling into Calendar Year 2022 the trend towards OT use hasn’t changed. In fact, the government’s use of OTAs has skyrocketed going from $3.4 Billion in 2018 to over $7 Billion in 2019 and the global pandemic served to accelerate the trend. Early predictions for OTA spending in 2021 top $12.5 Billion on COVID related expenses alone according to an article in NextGov.

“Congress allocated trillions of dollars to federal agencies to combat the COVID-19 pandemic and, in an effort to get that money out the door quickly, the top three spenders awarded more than $12.5 billion using an opaque acquisition method known as other transaction authorities, or OTAs, according to a government analysis.”

With an increased focused on supply chain surety and technological advancements via R&D it’s likely the trend towards OTA spending will increase.

For industry looking to capitalize on the OTA BOOM they’ll have a maze to navigate of various OTA consortia with different managing entities that have different philosophies on what an OT really should be. Most, if not all require annual membership dues of $250 or more and what industry members will find behind the closed access doors of the members only portal varies with the management firm.

To ensure small businesses capture the value available via OTs it’s important they keep their eye on the prize when adding OTs to their contracting portfolios. Here are some tips for picking consortia to join:

  1. Do your research on the Management Entity
    1. What is their philosophy/what role do they take?
    2. What benefits does membership receive?
  2. Make sure the technology focus areas, sponsors (DoD, Civilian, other), and previously awarded technology profiles align with the business’s strategic direction
  3. Check if cross consortia membership is available and supported by the management entity. You want to get visibility with multiple sponsors and ensure cross-domain solutions are realized where appropriate.

Resources: 

https://aida.mitre.org/ota/existing-ota-consortia/ 

https://www.nationaldefensemagazine.org/articles/2019/7/9/ota-agreements–exploding-in-popularity

https://www.nextgov.com/cio-briefing/2021/08/watchdog-covid-19-spending-using-otas-had-less-oversight-transparency-usual/184253/