On July 8, the Department of Defense (DoD) Office of the Under Secretary of Defense for Acquisition and Sustainment (OUSD (A&S)) announced its first update to the Other Transactions (OT) Guide since November 2018. The DoD OT Guide provides a detailed overview of the OT process and best practices, from pre-solicitation to award and post-award management.

This much-needed update addresses changes to statutes and regulations and incorporates DoD Inspector General (DoD IG) and U.S. Government Accountability Office (GAO) recommendations since its previous release in 2018. The updated OT Guide also provides additional administrative guidance, best practices and new considerations for using the OT consortia business model.

One tool the DoD uses to foster collaboration with non-traditional defense partners – including small businesses, technology start-ups, and academia – is the Other Transaction Authority (OTA). OTAs are a procurement alternative that offers the following:

• Streamlined contracting processes
• Reduced administrative burden
• Increased flexibility compared to traditional Federal Acquisition Regulation (FAR)-based contracting methods

Additionally, OTAs promote innovation and allow the DoD to stay at the forefront of emerging technologies through research, prototyping, and production efforts.

Below are some key updates to the OT Guide.

Announcing the New Guide for Research OTs

In total, there are three different types of OT agreements: research, prototype, and production. Prototype and production OTs are authorized under 10 U.S.C. § 4022, whereas research OTs are authorized under 10 U.S.C. § 4021. Research OT vehicles are used for basic, applied, and advanced research projects. They are intended to spur dual-use research and development by taking advantage of economies of scale without burdening companies with government regulatory requirements and overhead.

The updated OT Guide clarifies that the OUSD for Research and Engineering (OUSD (R&E)) is responsible for promulgating policy and guidance for research OTs and announced that there is a new guide published in June 2023 containing advice and best practices on all phases of planning, awarding and administering research OTs.  

More Detail on the Role and Authority of Agreements Officers

Agreement Officers (AOs) have delegated statutory authority to enter into, administer, or terminate OTs. To be appointed as an AO, an individual must possess a level of responsibility, business acumen, and judgment that enables them to effectively operate in the relatively unstructured environment of OTs. The updated OT Guide importantly clarifies that AOs need not be warranted Contracting Officers, unless required in the specific DoD component’s appointment process. As stated in the OT Guide, each DoD component is responsible for determining the Defense Acquisition University (DAU) and/or component-provided courses that AOs are required to complete. 

The updated OT Guide also provides a new best practice for the appointment of AOs, advising that DoD components should either edit the Standard Form 1402– Certificate of Appointment, which cites the FAR as the authority for a warrant or create its own custom letter document.

OT Reporting Requirements

The OT Guide also clarifies requirements for government reporting on OTs. The DoD team overseeing the transactions must record research OTs, including modifications, in the Financial Assistance Award Data Collection (FAADC) and report prototype and production OTs in the Federal Procurement Data System (FPDS). 

Further, OTs awarded to a consortium must also be recorded in FPDS. But an award from a consortium manager or lead company to a consortium participant, where the government is not making the award itself, is not an OT and is therefore not tracked in FPDS. In these cases, the OT Guide instructs the government to establish an OT Indefinite Delivery Vehicle (IDV) version of a contract action report for the overarching agreement to the consortium manager, and as the projects are awarded to consortium participants, they should be reported as “orders” against that IDV identifying the consortium participant as the awardee.

More Guidance for AOs Handling Bid Protests

While the 2018 edition of the OT Guide simply recommended that agencies implement procedures should an agency-level bid protest be filed and assured that the risk of a bid protest was low, the 2023 updated version provides detailed procedures on how AOs should handle bid protests once received and steps they should take with legal counsel. Specifically, the updated OT Guide encourages information sharing with unsuccessful performers to avoid bid protests in the first instance, instructs what AOs should share with legal counsel on initial contact, summarizes what legal counsel will do during the pendency of the protest, and outlines how AOs should handle any pending actions related to the OT.

Additional Guidance on Follow-On Production OTs

More details about follow-on production awards are also provided in the updated OT Guide. The authority of prototype OTs under 10 U.S.C § 4022 states that the government may make the follow-on production award as either an “agreement” in accordance with the statute or as a FAR-based contract.  Accordingly, a follow-on production award may be part of a prototype OT, or it may structure the follow-on production award as separate awards. Moreover, a production OT can be awarded on another agency’s prototype award. 

The updated OT Guide also provides two new best practice comments, noting that in the case of a prototype OT with a plan for a follow-on production OT, the government should have clearly defined criteria for success as well as pricing for any potential follow-on production award set forth prior to selection of the successful prototype. Additionally, in connection with planning for a follow-on production award, the government should assess the impact of restrictions on intellectual property deliverables and rights.

New Appendix Addressing Consortia Business Model Considerations

Finally, the updated OT Guide includes more information and an entire appendix (Appendix F) addressing OT consortia business model considerations. This new appendix covers what AOs should consider when contemplating whether to leverage the membership of a consortium. It includes reporting requirements for OT consortiums, competition requirements, approval levels for consortia, the Defense Acquisition University (DAU) CCON 023, OT Authority Credential training program, and other unique issues when the government chooses a consortium model that leverages a consortium management organization (CMO).

In sum, the release of the updated OT Guide reaffirms DoD’s commitment to fostering innovation and collaboration through OTs. The OT Guide serves as a comprehensive resource for all stakeholders involved in OTs, providing necessary guidance to successfully navigate this flexible and rapidly evolving procurement method.