OTAs: preserving the authority

Other Transaction Authorities are the latest buzzwords in federal contracting, and for good reason.

OTAs have become critical to rapid prototyping in the defense realm, in some cases cutting off years from the time warfighters wait for new systems and capabilities. 

OTAs are a business tool that let the government buy products and services using means other than those governed by the Federal Acquisition Regulations. These authorities, initially conceived by NASA in the 1950s and later expanded to the Defense Department in 1994, have recently surged in use and popularity -- and praise. However, they also elicit a fair amount of criticism and debate about their future.

Fairness during the award process, soundness of proposals and lack of public information throughout the course of the award are among issues detractors highlight on OTAs. If their supporters want to preserve this acquisition instrument, they must address these concerns.

They’re not small concerns.

Various OTA forms now constitute a class of contract vehicles important to procuring cutting-edge technologies necessary to fill gaps in mission effectiveness across the services. They have been important in allowing the Defense Department to develop new solutions at an often-quicker rate than traditional systems.

OTAs not only help to accelerate innovation, they also help expand the defense industrial base by engaging small business innovators, Silicon Valley startups and other non-traditional defense suppliers. These advantages make OTAs important in the acquisition toolbox.

Over the past two decades, the Defense Department’s use of OTAs has grown exponentially. From 2013 to 2017 alone, procurements through OTAs increased in value from less than $500 million to more than $2 billion.

But the Defense Department has not issued guidelines for their use, so each service uses the authorities differently. In 2017, the Army accounted for more than half of OTA dollars spent while the Navy accounted for less than 5 percent. The non-uniform deployment of OTAs is evidence of their adaptability to defense agencies’ acquisition needs and strategies.

But as OTAs continue to grow as a percentage of defense contract dollars, they are not a replacement for the traditional acquisition process. Using them as such would not only demonstrate a fundamental misunderstanding of their purpose but also endanger their existence.

Traditional acquisitions based on FAR have provided our armed services with the most lethal and effective tools deployed on the battlefield. Ongoing efforts at reforming federal acquisition regulations continually seek to accelerate and improve government’s ability to purchase the goods and services for our warfighters. Stakeholders in government and industry alike have deep experience in this system, and many acquisition programs are best suited to use it.

Presenting OTAs as a wholesale replacement, not a complement to this system, will both create unintended consequences and a potential backlash that could minimize or eliminate them altogether.

Issues of fairness, transparency and predictability have already emboldened OTAs’ naysayers. In a recent challenge to a high-value award by the Army Contracting Command, Oracle America successfully argued to the Government Accountability Office that a follow-on OTA was made without adequate notice, competition or consideration.

Setting important precedent, GAO’s ruling should be a wakeup call to those who support the continued use of these authorities. The case raised important questions of how OTA awards are perceived and confirmed the high level of responsibility expected from those presiding over the awards and the recipients.

Charlie McBride, president of the Consortium Management Group, recalled at a recent NDIA event the admonition of a senior Army acquisition official: OTA is a gift from the Congress to the warfighter, and our job is not to screw it up with stupid human tricks.

This is a tool that represents progress in the pursuit of greater flexibility and innovation in the acquisition system. Its continued existence is vital to our battlefield superiority. It’s up to OTA proponents to guard against its misuse.