COMMENTARY

OTA growth drives more innovation

New analysis released earlier this year from Bloomberg Government indicates federal government spending on other transaction authority agreements has soared in recent years and that trend could be accelerated by the response to COVID-19.

This shift in approach is taking place because, over the last decade, OTAs have a proven track record in delivering innovation across a broad swath of technology areas – from compact lasers capable of shooting down drones, to small glide munitions for special ops teams, to precision-strike missiles.

As Jennifer Pahlka -- a member of the Defense Innovation Board -- testified before the House Budget Committee recently: “What Congress has already recognized they need -- through services that are in fact, though you’ve been told you can never have all three -- better, faster AND cheaper.”

Yet, there are some who still question the value of the consortium-based OTA model in driving innovation and believe that the the approach based on the Federal Acquisition Regulations is preferable. The reality is much different. Over the past decade, OTAs have delivered thousands of prototypes that are significant improvements for the warfighter -- lighter, more precise, more efficient, and cheaper than what’s come before. And they were developed and delivered faster.

Why?

  1. OTA’s are a magnet for Nontraditional Defense Contractors

There is growing understanding that large organizations, whether in the government or the private sector, find it extremely difficult to innovate. Smaller, more agile organizations are better suited to developing ground-breaking ideas and novel approaches.

The challenge for these small companies is how to navigate the complex federal bureaucracy and find a way to break through so that government customers will take notice. Additionally, it is extremely difficult to navigate the costing, compliance and contract management systems that you must master if you are to be successful in the world of the FAR.

Yet, under consortium-based OTAs (comprised of networks of companies -- large, small, traditional, NDCs -- and universities), these smaller, non-traditional defense contractors can join forces with other companies to develop proposals that are both innovative and scalable. They can also balance and mitigate technology, capital, time, and other risk areas.

  1. OTA’s don’t just encourage collaboration – they require it. And consortia make collaboration happen.

Under OTAs, traditional prime contractors must include significant participation from non-traditional defense contractors; otherwise they face a one-third cost share. In the National Armaments Consortium, roughly half of the prototypes have been led by NDCs, who often bring new ideas and novel approaches to solving our most challenging problems. Additionally, 99 percent of projects led by traditional contractors have included significant participation and contribution by NDC's.

There are dozens, if not hundreds, of these examples. But in one case, a nontraditional contractor called NovaTech, based in Virginia, developed three separate prototypes for metal components for a cannon-fired projectile. NovaTech’s prototypes utilized advanced metal-forming for manufacturing to ensure precision assembly and high performance under extreme environmental conditions, which reduced manufacturing costs by 65 percent.

  1. Unlike FAR-based contracting, OTA’s allow and encourage contractors to talk to Defense Department technology developers.

The reality is that it is difficult to develop an effective prototype if you don’t know what the government’s requirements are. 

Under OTAs, scientists, engineers, and program managers from industry and academia are able to collaborate with their counterparts in the DoD to discuss government needs and work through solutions as they are developing requirements, technical white papers and through the prototyping process. This helps both the government and the innovator. The government can refine its ideas as they learn more about what is technically feasible. Meanwhile, innovators can continue to iterate to develop the best solutions that meet the requirements of the government. Rapid and effective prototyping means getting the solution right the first time. Collaboration between government and industry occurs throughout the entire process and results in speed, efficiency, innovation, and cost savings .

  1. The streamlined process fosters competition and operates at the speed of the need

By reducing barriers to entry, more ideas for solving challenging problems come to the table. This, in turn, creates a fierce competition of ideas and gives the government options to choose from - forcing interested companies to push the envelope in developing prototypes that can win out, and do so in a timeframe that puts new technologies in the hands of our warfighters.

There’s no doubt there are ways to improve OTAs, particularly by identifying and standardizing best practices. But at this point, it’s clear that OTAs are helping to bring innovative solutions to some of the most challenging problems facing the government.

At a moment when our overseas adversaries are investing huge sums in technology development, we must continue to support the consortium-based OTA model for the benefit of a strong industrial base, our nation’s security, and to provide the decisive advantage for our warfighters.

About the Author

Charlie Zisette is the executive director of the National Armaments Consortium.

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