We all know government acquisitions are slow. New fighter planes, tanks, and battleships can take ten to fifteen years to develop and field. By then, the technology is no longer state-of-the-art.
We all know government contracts are cumbersome. Regulations upon regulations upon regulations! Special accounting rules. Downright predatory intellectual property provisions.
“Stop the madness!” “There has to be a better way!”
Exempt from the FAR?
What if I told you there’s a special type of government contract that is:
(a) exempt from the Federal Acquisition Regulation (FAR);
(b) exempt from unique government cost accounting standards;
(c) exempt from grasping government intellectual property clauses;
(d) exempt from protests at the Government Accountability Office (GAO); and
(e) negotiated and awarded much faster than traditional contracts?
What I just described is called an “Other Transaction” agreement or OT agreement. Technically, OTs are not federal contracts, not grants, not cooperative agreements, and not “procurement.” Other Transactions do not fit into any other category of federal contracting, hence the distinguishing name. They are defined in the negative and you will not find a statutory or regulatory definition.
Instead, OTs were created to avoid the typical restrictions of traditional government procurement. Uncle Sam realized that he was no longer the dominant player in advancing technology, and that the private sector leads the charge.
OTs sound extraordinary, and in some ways, they are. But you must understand that OTs are simply normal contracts, unfettered by traditional government procurement laws and regulations. Other Transactions allow government contracts (B2G) to use the same methods and flexibility as the private sector (B2B). OTs give the government the same freedom of contract that you and every other company enjoy.
Private industry is now the paramount source of innovation, technology, and R&D funding
Consider that Apple could theoretically buy out several of the largest defense contractors with its cash on hand. Government is no longer the center of the technology universe. Top talent and innovative technologies no longer orbit around the government. Dealing with the frustrations of traditional government contracts isn’t sweetening the deal, either.
So, federal agencies like DoD, NASA, DHS, and Energy use OTs to connect to “non-traditional contractors,” which is a fancy way of saying “the private sector that won’t touch government contracts with a thirty-foot pole.” Uncle Sam realized the best technology firms shy away from traditional government contracts. OTs make it easier by dodging most of the problems.
Other Transactions are making headlines
Other Transactions are a hot topic in the news and on Capitol Hill. Each of the recent National Defense Authorization Acts has dedicated sections to new legislation on OTs. More and more federal agencies are using OT authority. Since OTs are related to broader acquisition reform efforts, you can be sure they will remain in a prominent position.
How your firm can explore opportunities with Other Transactions
The private sector loves OTs because it’s an escape from the traditional rules of government contracts. Competition, negotiation, selection, and administration can occur much like it does in the private sector—faster, simpler, and with more flexibility.
If your firm works in R&D or cutting-edge technology, you need to explore your options for OTs. While one firm can win an OT agreement with a federal agency, there’s also a collaborative model called a “consortium agreement.”
The consortium agreement model
Consortium agreements have a single integrator that connects the government client to several different private-sector firms or organizations. The government client solicits for specific projects and the consortium manager handles it from there. Instead of issuing separate OT agreements to each member of the consortium, the government issues one OT agreement to the consortium manager, which acts as the middleman.
The consortium manager charters and controls membership, and deals with administrative issues like payments and getting adequate proposals, while leaving the actual R&D and technology work to the consortium members. Typically, consortium members pay a nominal administrative or membership fee for the opportunity to collaborate with each other and the government using OTs for cutting-edge R&D and technology.
Where can I find out more about Other Transactions?
One of my major end-clients is the premier agency for Other Transactions, and I’ve been involved with acquisition innovation and reform for most of my career. Feel free to email me to discuss OT opportunities or to get a free copy of my full-length NCMA article on OTs, which covers the frequently asked questions (FAQs).
Christoph Mlinarchik, JD, CFCM, PMP is the owner of www.ChristophLLC.com, providing expert advice in government contracts: consulting, professional instruction, and expert witness services. Contact Christoph at Christoph@ChristophLLC.com.
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