When issuing new contracts, the Federal Government is increasingly bypassing the Federal Acquisition Regulations (FAR) and increasingly using a long underused, but recently updated approach called Other Transaction Agreements (also OTA). Given this significant shift, you will benefit from knowing what changes to anticipate and how to adjust your company’s approach to pursuing Government work.
OTA’s allow Government agencies to cast their nets wider when considering a broader range of businesses now eligible to win Government contracts. The OTA is designed to prioritize opportunities for small businesses or “nontraditional” defense contractors that do not typically work with the Government. Traditional defense contractors can also be eligible when they meet specific criteria, meaning defense industry leaders such as Lockheed Martin and Raytheon can participate as well.
In a study by Bloomberg Government, DoD’s OTA obligations have grown by almost 80% year-over-year, with total Pentagon OTA contract obligations expected to reach as high as $7 billion for the fiscal year ending in 2019. If this trend continues, 2020 could easily see $12 billion in OTA obligations. Clearly, this is an area worth watching closely if you are working with the Government (or wish to be). Examples of recent OTA awards include:
- The Army issued $265 million to Microsoft Corp to date as part of a pilot program to develop heads-up displays for ground personnel using its Hololens augmented reality headset
- DHS issued $10 million to the Border Security Technology Consortium for development of surveillance tools
- HHS issued $41 million to date in fiscal 2019 to Johnson & Johnson as part of a five-year, $273 million contract to develop drugs to mitigate the threat of pandemic illnesses
- The Army recently finalized a $384 million deal with Raytheon for six missile defense radars called LTAMDS, designed to replace the Patriot missile defense radar
The vast majority of OTA funding has been awarded through various consortia, the largest of which is Advanced Technology International (ATI). In these cases, OTA requests are not posted through official government channels such as SAM (System for Award Management) – they are typically issued as Requests for White Papers from the consortia to its members. Thus, if you are not a consortium member you may never see the RFW and cannot submit a bid. Fortunately, becoming a member of a consortium is not difficult or expensive, but it takes planning to decide upon which consortia to join.
If you need help navigating the OTA landscape, please give us a call.