Other Transaction Agreements

What is an OTA?

Other Transactions (OTs) are often referred to as OTAs (OTA is actually the Other Transaction Authority, that is, the authority for an agency to issue an OT).  (OTA) is a special vehicle used by federal agencies for obtaining or advancing research and development (R&D) or prototypes. An OT is not a contract, grant, or cooperative agreement, and there is no statutory or regulatory definition of "other transaction." Only those agencies that have been provided OT authority may engage in other transactions.

OT authority originated with the National Aeronautics and Space Administration (NASA) when the National Aeronautics and Space Act of 1958 was enacted. Subsequently, seven other specific agencies have been given OT authority: the Department of Defense (DOD), Federal Aviation Administration (FAA), Department of Transportation (DOT), Department of Homeland Security (DHS), Transportation Security Administration, Department of Health and Human Services, and Department of Energy. Other federal agencies may use OT authority under certain circumstances and if authorized by the Direction of the Office of Management and Budget (OMB).

Generally the reason for creating OT authority is that the government needs to obtain leading edge R&D (and prototypes) from commercial sources, but some companies (and other entities) are unwilling or unable to comply with the government's procurement regulations. The government's procurement regulations and certain procurement statutes do not apply to OTs, and accordingly, other transaction authority gives agencies the flexibility necessary to develop agreements tailored to a particular transaction. The Competition in Contracting Act (CICA), Contract Disputes Act, and Procurement Integrity Act are examples of three statutes that do not apply to OTs.

Benefits of an OTA

There are many benefits to using an OTA, primarily decreased acquisition time and cost. There are other notable benefits, making the OTA a unique and desirable tool for program and contract managers alike, including:

  • Federal funding can be obligated quickly.
  • An OTA is not a contract, grant, or cooperative agreement. As a result, an OTA is not subject to the Federal Acquisition Regulation (FAR) or its supplements.
  • Projects awarded under an OTA are not subject to DCAA audits.
  • Government rights to intellectual property are generally minimal and negotiable.
  • Awards cannot be protested.
  • Competition is required only to the maximum extent practicable.
  • The Government is allowed to openly discuss requirements and to collaborate with contractors to obtain the best approach for developing technology.
  • OTA projects generally are awarded on a Firm Fixed Price basis.
  • Payments are made based on measurable milestone achievements. No arm-length agreement between government and contractor, but rather a partnership based on IPT concept.

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