Other Transaction Authorities (OTA) - Application to Product Support
DAU GLOSSARY DEFINITION
OTA is the term commonly used to refer to the authority of the DoD to carry out certain prototype projects and transitioning their successes into follow-on production. Other Transactions (OT) are legal acquisition instruments other than contracts, grants, or cooperative agreements that offer a streamlined method for these prototype projects. OTs have been used on pilot programs focused on improving product support for weapon systems or to support global logistics operations.
OTs originated from the passage of the National Aeronautics and Space Act of 1958 (Space Act, P.L. 85-568), which established the National Aeronautics and Space Administration (NASA). The impetus for establishing OT agreements was meant to provide the new agency with “the necessary freedom to carry on research, development, and exploration.”
Within the DoD, OTs can be traced back to Congress’ granting of “temporary authority,” to the Defense Advanced Research Projects Agency (DARPA) to enter into “cooperative agreements and other transactions” as a part of the National Defense Authorization Act (NDAA) for fiscal years (FY) 1990 and 1991. While authorities granted to DoD have expanded, they are primarily codified within 10 USC 4021 (formerly 2371) and 10 USC 4022 (formerly 2371b).
According to a Congressional Research Service (CRS) report #R45521, OTs have the potential to provide significant benefits including: “attracting nontraditional contractors with promising technological capabilities to work with DOD; establishing a mechanism to pool resources with other entities to facilitate development of, and obtain, state-of-the-art dual-use technologies; and offering a unique mechanism for DOD to invest in, and influence the direction of, technology development.” Further, a “…number of analysts warn that along with the potential benefits come significant risks, including potentially diminished oversight and exemption from laws and regulations designed to protect government and taxpayer interests.”
Spending on OT agreements within the DoD has grown significantly in recent years in support of greater industry participation and accelerating innovation to meet evolving threats. According to CRS report #R45521, most of the new DoD prototype agreements were awarded by the Army and DARPA with others awarded by the Air Force, Navy, and US Special Operations Command (USSOCOM).
According to Federal Procurement Data System-Next Generation (FPDS-NG) data, DoD OT spending grew from $474M in FY14 to over $5.4B in FY19, with the Army accounting for approximately $3.7B of the spending in FY19. Of additional note, while OT agreements are primarily focused on research and development (R&D), DoD OT agreement funding is not limited to the department’s modernization accounts (e.g. Research, Development, Test and Evaluation (RDT&E) and Procurement). A review of DoD contract actions indicate that Operations & Maintenance (O&M) appropriations (Defense-wide/Military service) and Working Capital Funds (WCFs) were the primary funding source for OT agreements.
A key factor in the growth of OT agreement usage has been DoD leadership focus on closing the technological gap between the US and its adversaries. Whether offered in public speeches (e.g., Under Secretary of Defense for Acquisition, Technology, and Logistics Kendall's remarks at the 2014 Air Force Association Symposium) or captured within Congressional reports (e.g., S. Rept. 113-176), DoD’s focus on maintaining a technological edge has resulted in greater OT agreement usage.
Another key factor that could be contributing to DoD’s growth in OT agreement usage could be a change in the approach to innovation. In addition to the three military departments, the Defense Innovation Unit (DIU) serves as a key organization that, per its website, “…works directly with its DoD partners (i.e., the Services, Combatant Commands, and DoD agencies) to identify, evaluate, and purchase commercial innovation to solve national defense problems while saving time and money.”
OT Innovation and Life Cycle Logistics
Examples of these commercial innovations applied to life cycle logistics concerns, according to DIU’s website, include the following:
- Air Force - “TransVoyant’s machine learning algorithms and live data streams to integrate disparate data sources into an open, scalable, and secure data management platform to support real-time global logistics operations; and working with C3.ai to develop algorithms to help DoD transition from standard time-based maintenance practices to more advanced predictive maintenance methods”.
- Army – Deploying the “Uptake platform on its Bradley Fighting Vehicles to determine if it can improve the readiness of the fleet by predicting component failures before they occur”.
These cases represent just a few of the pilot programs focused on improving product support for weapon systems or to support global logistics operations.
With Congress’ expansion of DoD’s OT authorities to allow for continuation into the production stage and focus on Acquisition reforms, the DoD has responded with the introduction of the Adaptive Acquisition Framework (AAF). Of the six AAF pathways, the Middle Tier of Acquisition (MTA) pathway, which follows DoDI 5000.80, focuses on rapid prototyping and fielding. For information on Product Support policy for the MTA pathway, see DoDI 5000.91. For clarity, the MTA pathway and OT agreements are two separate and distinct enablers, which can be used together or separately.
While the availability of readiness-related funding is a current priority for the Congress, military services, and support agencies, circumstances may change. Throughout the course of an FY, the military services and agencies reallocate resources, as necessary, to meet unfolding requirements. Depending on funding availability, appropriate reprogramming actions may be necessary to ensure the proper realignment of appropriated dollars to other accounts. Where funding for a product support-related OT agreement may not be available in the beginning of an FY, a prudent practitioner might make the business case to include a related project within the reprogramming process.
Something else to consider is how best to grow life cycle logistician and readiness practitioner competencies for OT agreements. As previously addressed, the Army has invested in the development of its workforce and had the highest amount of OT agreement spending.
With continued growth in DoD OT agreement usage and spending, competition will increase for available resources (funding, experienced practitioners, etc.). With increased OT agreement usage and spending, increased oversight by policy makers will likely follow. Adherence to OT agreement requirements (statute, policy, regulation) combined with increased practitioner training and expedited delivery of capability will be key for DoD to continue to see expanded authorities. As such, early adopters and practitioners will have first mover advantages.
Potential Risks & Benefits for Product Support
As previously cited, there are numerous benefits and risks associated with the use of OT agreements. While traditional methods have more clearly defined expectations for life cycle logisticians, OT agreements represent a new potential enabler for this group of professionals. As OT agreements are focused on research, prototyping, and related follow-on production, these professionals will need to ensure their familiarity with and participation within related planning to ensure that product support and planning and execution equities are addressed.
Key among many challenges will be the Department’s ability to manage growing OT agreement demand to develop and deliver capability at the speed of relevance. For life cycle logisticians and others supporting readiness initiatives, a greater awareness and leverage of OT agreements could contribute to DoD’s readiness recovery efforts. The good news is that examples exist, as described above, of readiness-related pilots that utilize OT agreements. For additional information on OTAs, the Government Accountability Office (GAO) recently published a report (GAO-22-105357) titled "Other Transaction Agreements: DoD Can Improve Planning for Consortia Awards," which included six recommendations as well as summary data on OTAs since 2019.
If participation within DAU’s OT course offerings are any indicator, the military services and agencies have invested in enhancing workforce awareness and practitioner proficiency. While OT agreements have not traditionally been a part of the life cycle logistician’s toolkit, enhanced awareness, training, and utilization of this authority will contribute to DoD’s proficiency in their usage as related to system sustainment. Combined with enduring Congressional support (i.e. appropriations and expanded authorities) and DoD’s continued focus on rebuilding of military readiness, OT agreements could prove to be a key tool and enabler for addressing current and future product support and readiness challenges.