Acquisition Disruption – Innovative Concepts in Government Contracting

Federal ProcurementGovernment procurement often gets a (not altogether undeserved) bad rap as a cumbersome process that is lacking in imagination and innovation.  Today more than ever, however, the federal government is making use of cutting edge procedures and methods to attract commercial companies to government contracting and to encourage modernization and efficiency in procurements.  Below we discuss some of the creative tools being used to benefit both contractors and the government, including other transaction agreements, contests, public-private partnerships, and other novel approaches.

Other Transaction Authority/Other Transaction Agreements

“Other transaction authority” is used by select federal agencies to obtain or to advance research and development in areas of importance to the government and, often, to the general public.  The resultant contract is an “other transaction agreement” or “OTA.”  This term is not defined by statute or regulation; it is best defined by what it is not.  An OTA is not a procurement contract, grant, or cooperative agreement.  It is a different type of agreement with the government – one that is not subject to the strict regulatory regimes that characterize other types of contracting.

Only those agencies that have been granted specific authority may enter into an OTA.  NASA was the first agency to be given other transaction authority, in 1958.  See National Aeronautics and Space Act, 42 U.S.C. § 247(c)(5).  Congress gave the Department of Defense (DoD) other transaction authority for research projects in 1990 (see 10 U.S.C. § 2371) and, more recently, for prototypes (see 10 U.S.C. § 2371b).  Multiple DoD components now use OTAs, including the Air Force, Army, Defense Advanced Research Projects Agency (DARPA), Defense Threat Reduction Agency, the Office of Naval Research, and the U.S. Special Operations Command.

Other agencies using OTAs for research and development and/or prototype activities include:

  • the Federal Aviation Administration;
  • the Department of Homeland Security, including the Transportation Security Administration and the Science and Technology Directorate;
  • the Department of Energy (DOE), including the Domestic Nuclear Detection Office, Advanced Research Projects Agency-Energy, and Office of Energy Efficiency and Renewable Energy;
  • the Department of Transportation (DOT), including the Pipeline and Hazardous Materials Safety Administration; and
  • the Department of Health and Human Services (HHS), including the National Institutes of Health (NIH), the Biomedical Advanced Research and Development Authority (BARDA), and the Office of the Assistant Secretary for Preparedness and Response.

As a general rule, acquisition-related regulations and statutes, such as the Competition in Contracting Act, Contract Disputes Act, and the Federal Acquisition Regulation (FAR), do not apply to OTAs.  Similarly, the various laws and regulations concerning intellectual property rights and cost accounting/pricing do not apply to OTAs (although OTAs generally do contain provisions addressing such topics as IP rights and cost accounting, and sometimes those provisions hew closely to what would otherwise be found in a procurement contract).

Due to this easing of restrictions, OTAs encourage participation by private sector sources of valuable R&D skills (sometimes referred to as non-traditional sources) that might be unwilling or unable to enter into a standard government contract, grant, or cooperative agreement.

Before a contracting official can use an OTA, most agencies first require that the contracting official determine that a procurement contract, grant, or cooperative agreement is not appropriate or feasible.  Several agencies’ regulations state that agency contracting officials cannot use an OTA to attract a commercial source when the principal purpose of the research is to directly benefit the government and that it is only when more widespread national security or national welfare interests are at stake that an OTA is appropriate.  Because of these restrictions on the use of OTAs, they remain less common than other contracting vehicles.

One obvious benefit is that OTAs can be more flexible and responsive than traditional contracting instruments.  OTAs can be tailored to the needs and circumstances of the program and the participants.  They often include some degree of cost-sharing, allowing the government to stretch its research dollars.  Cost-sharing might include actual cash contributions, or may involve the use of equipment, facilities, and other assets.  OTAs also can free up government procurement personnel, particularly when contractors are selected to run consortiums whose members compete for OTAs.  In these situations, the government will announce its interest in receiving from consortium members white papers that address a particular topic or problem, and based on these papers, the contractor or agency may select a number of consortium members to submit more formal proposals, followed by a further downselect process.

A potential downside to the use of an OTA is the added risk to the government due to less stringent oversight and regulation.  In addition, it is difficult to assess the frequency and effectiveness of the use of OTAs by agencies because traditional reporting requirements and recordkeeping are not consistently followed.

We expect to see an uptick in the use of OTAs in the near future, particularly in light of the DoD’s expanded OTA authority.  The 2016 NDAA made DoD’s OTA authority more permanent, and subsequently 2017 was a milestone year for DoD contractors, with a significant increase in the use of OTAs.  The 2018 NDAA further encouraged use of OTAs by including a specified preference for the use of OTAs for prototypes.

As an example of recent OTA activity, the Navy’s Space and Naval Warfare Systems Command (SPAWAR) recently announced a forthcoming OTA procurement called the Information Warfare Research Project (IWRP).  Under IWRP, SPAWAR plans to spend about $100 million on cybersecurity-related prototypes in areas including cyber warfare, cloud computing, data analytics, assured command and control, and embedded systems in the “Internet of Things.”  As is common with other OTA projects, SPAWAR intends to hire a third-party firm to manage a consortium of potential bidders for the OTA project work.  Consortium members will likely include both traditional and non-traditional defense contractors.  The members would compete for individual projects by submitting proposals in response to requests for proposals.

Research-focused organizations such as the NIH, DARPA, and the Intelligence Advanced Research Project Activity (IARPA) have also expressed the willingness to consider using OTAs, particularly where non-traditional contractors are involved.


Another innovative approach to federal procurement involves the use of contests.  The best example is the website operated by the General Services Administration.  The site is a listing of challenge and prize competitions run by federal agencies to crowdsource solutions to various problems.  More than 100 agencies have engaged in competitions, including the DoD, DOE, Federal Trade Commission, NASA, HHS, U.S. Mint, Department of Labor, Department of Agriculture, and the Department of the Interior.  A recent review of current challenges includes contests by the National Institute of Standards and Technology, the Environmental Protection Agency (EPA), the National Science Foundation, the Office of the Director of National Intelligence, and the U.S. House of Representatives, among others.

Members of the public can search and review hundreds of open competitions, and can submit a response by creating a free account. Some contests are even specifically designed for select groups, such as high school students. To register, all one need do is create a username and password, and provide an email address.  The agencies pay prize money to those contestants who meet specified criteria and competition rules. is an outgrowth of the 2009 Strategy for American Innovation outlined by President Obama and a subsequent Office of Management and Budget memorandum providing guidance for agencies wishing to use prizes to stimulate innovation.  On January 4, 2011, President Obama signed Public Law 111-358, the America COMPETES Reauthorization Act, which added section 24 (Prize Competitions) to the Stevenson-Wydler Technology Innovation Act of 1980, to provide agencies with authority to conduct prize competitions in order to spur innovation, solve tough problems, and advance their core missions.

Other contests used by government include:

  • The “ThunderDrone” competition, a rapid prototyping event, where unmanned aerial vehicles are tested to gather data relevant to drone operations.  The first competition was held in 2017 and hosted by SOFWERX, a public-private technology incubator created under a partnership agreement between Doolittle Institute and the U.S. Special Operations Command (USSOCOM).  The contest pitted small drones against each other to demonstrate new unmanned capabilities, such as drone swarming.  On January 29-31, 2018, SOFWERX and USSOCOM hosted the second ThunderDrone Rapid Prototyping Event (RPE) Tech Expo, which focused on Counter Small Unmanned Aerial Systems (C‑SUAS). Top performers from this demonstration event will compete for cash awards in a final evaluation event (nicknamed the “Game of Drones”) in Las Vegas, NV in June 2018.
  • IARPA prize challenges, listed on IARPA’s own site, akin to  (In fact, many of the challenges listed here are also posted to  Recent contests ask competitors to create a method to forecast geopolitical events, to build a functional map of the world from satellite imagery, and to improve facial recognition and fingerprint recognition technology.
  • EPA prize challenges, which include contests to develop advanced septic systems to manage nutrient pollution, to come up with air quality monitoring systems for use during wildfires, and to retrofit existing chemical screening technologies to more accurately take into account metabolic processes.

Public-Private Partnerships

In addition to the aforementioned SOFWERX, which runs the CyberDrone competition, a number of other public-private partnerships are providing innovation in government contracting.

For example, several agencies run incubator programs that target startups or non-traditional contractors.  One of the most well-known examples is DoD’s Defense Innovation Unit‑Experimental or DIUx.  See  The goal of DIUx is to attract nontraditional suppliers to address defense challenges by using proposal submission formats familiar to commercial technology firms.  Companies can quickly enter into contracts that have a faster turnaround time and are more flexible than traditional contracts, such as OTAs.  DIUx has offices in Silicon Valley, Boston, and Austin – cities known for attracting new, entrepreneurial businesses.  For more details about how DIUx works with private firms, see this Rand Foundation report. DoD announced in October 2017 that DIUx saw the first of its pilot projects turned into a full OTA contract.  The OTA, with commercial cybersecurity firm Tanium, was a five-year, $750 million contract with the Army for cybersecurity services.

Other incubator programs include:

Other examples of innovative partnerships between agencies and industry include the intelligence agencies’ use of INCUTEL as a purchasing agent, the CIA’s Silicon Valley outreach program and outreach to academia (which includes interactions without any exchange of funds, such as peer review by students and companies), private sector externships (again, the CIA has an established program in this space), “Shark Tank”-like presentations by industry (the Defense Health Agency has recently used such a format for the sharing of ideas), and short term talent sharing (the InterGovernmental Personnel Act permits temporary hiring from industry for short term government needs).

Broad Agency Announcements

Another federal procurement method used by agencies involves Broad Agency Announcements (BAAs). BAAs are used by agencies to communicate their research interests to private companies. The announcements solicit scientific and research proposals from the private sector and include criteria for selecting proposals for the award of research and development (R&D) contracts, grants, or OTAs. During the selection process, proposals are subject to peer or scientific review. See FAR 6.102(d)(2).  BAAs are competitive procedures that meet the statutory requirement for full and open competition. See FAR 6.102(d)(2).  However, they can only be used in situations in which meaningful proposals with varying scientific or technical approaches can reasonably be expected. See FAR 35.016.

Among the agencies using BAAs are:

  • DoD;
  • DoT;
  • the Food & Drug Administration;
  • the Department of Commerce;
  • DARPA;
  • NIH; and
  • USAID.

Like traditional procurement contracts, BAA opportunities can be found on and  They also are advertised directly on participating agency websites.


In sum, federal agencies have numerous tools at their disposal to attract non-traditional contractors to the space, and to more rapidly innovate in a business-friendly way.  Potential contractors should seek out these opportunities, and government agencies should consider expanded use of these mechanisms to attract new entrants into the contracting arena.

*Victoria Dalcourt is a Law Clerk in our Washington, D.C. office and not admitted to the bar.