August 21, 2023
Key Changes in the Updated Other Transactions (OT) Guide
By: Emily Xiong
Last Month, the Office of the Under Secretary of Defense for Acquisition and Sustainment (OUSD[A&S]) released the newest version of the Other Transactions Guide (OTG), Version 2.0. The purpose of the guide is to introduce the three types of Other Transaction (OT) agreements: research, prototype, and production. Since the OTG is not a formal policy document, the Government team should still consult with legal counsel when needed, and assume procedures are permitted if enacted in the best interest of the Government. Below we highlight the key updates in the newly released version.
Purpose and Types of OTs
An Other Transaction is a vehicle that federal agencies, specifically the Department of Defense (DoD), can use to expedite and simplify access to important technology that they need faster than typical Federal Acquisition Regulations (FAR) protocol allows. OTs were also created to give the DoD the flexibility to adapt to and incorporate business practices that reflect the current commercial industry standards and best practices that those standards change. The purpose of the guide has been clarified to provide advice and lessons rather than solely introducing the types of OT agreements. It emphasizes that the document is not a formal policy document. Research OTs are now authorized under 10 U.S.C. §4021 instead of 10 U.S.C. §2371, and the Office of the Under Secretary of Defense for Research and Engineering (OUSD[R&E]) is responsible for promulgating policy for research OTs. Prototype OTs are authorized under 10 U.S.C. §4022 instead of 10 U.S.C. §2371b. Production OTs are authorized under 10 U.S.C. §4022(f) instead of 10 U.S.C. §2371b(f). A new note clarifies that procurement for experimental purposes under 10 U.S.C. §4023 does not create a new type of award instrument, and users should follow the policy rules applicable to the chosen instrument.
The guide highlights that the involvement of the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA) may be helpful for the Government Team in executing OTs effectively. The process of appointing Agreements Officers (AOs) is now detailed, with the possibility of delegation by the Head of the Contracting Activity (HCA). It is also clarified that AOs need not be Contracting Officers, unless required by the Component's appointment process. The AO approval authority for Prototype OTs up to $500 million now lies with the Senior Procurement Executive (SPE) of a Military Department or Agency Director for DARPA and Missile Defense Agency (MDA). Early engagement and coordination with DCMA and DCAA are emphasized as critical for determining the type of support they can provide.
Publicizing, Soliciting, and Evaluating
The guide advises targeting "potential performers" instead of technology providers when publicizing for solutions. Solicitations should generally describe the problem, provide instructions, and include any known terms of the award. The document also specifies that applicable laws and terms should be included in the solicitation. The selection process is made more flexible, with standard regulations such as FAR, DFARS, and CICA no longer applying.
A new section on entity registration in the System for Award Management (SAM) is introduced. It states that prior to being awarded an OT, the awardee must be fully registered for “All Awards” in SAM. The guide provides additional details on payments, allowable costs, audit procedures, and resource sharing. It specifies that OT agreements awarded under the authority of 10 U.S.C. 4022 are considered Federal agency procurements and are subject to the ethics requirements of the Procurement Integrity Act.
Several new definitions, including Ask Me Anything Events, Performer, Reverse Industry Day, Small Business Concern, etc., are added in the appendix. The guide includes new links and resources related to OTs for further information and guidance.
Changes in Legislation
Various sections of the National Defense Authorization Act for Fiscal Year 2021, 2022, and 2023 have resulted in changes in the sections of the U.S. Code where OTs are authorized. These changes have impacted the use of OTs for research projects, prototype projects, and follow-on production efforts.
In summary, Version 2.0 of the OTG provides more comprehensive and updated information on the use and execution of OTs, taking into account recent legislative changes and best practices. It addresses key aspects of OT implementation in the sections listed above and provides an updated list of available resources.