April 8, 2020 - Coronavirus

Congress, DoD Encourage Use of Other Transaction Authority in Response to COVID-19

FCADepartment of Defense (“DoD”) acquisition chief Ellen Lord earlier this week issued a memorandum reducing internal approvals required to issue other transactions (“OTs”) for prototype projects related to the national emergency declaration for the Coronavirus Disease 2019 (“COVID-19”).  Under the temporary authority, granted by Congress in Section 13006 of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and in place until the national emergency declaration is rescinded, many more DoD acquisition officials are now authorized to award prototype OTs without needing higher approval within DoD or notifying Congress.

Specifically, prototype OTs and follow-on production contracts or OTs in excess of $100 million may now be approved by the Directors of the Defense Agencies/Field Activities, Commanding Officers of Combatant Commands with contracting authority, and the Director of the Defense Innovation Unit, rather than an agency’s senior procurement executive.  Similarly, whereas agreements in excess of $500 million typically require Lord’s (or her fellow Under Secretary’s) approval and 30-days advance notice to Congress, they now may be approved by an agency’s senior procurement executive, with notice to Congress “as soon as practicable” after award.

We expect this reduction of internal approvals to result in a surge of prototype OTs and follow-on production awards as DoD mobilizes its resources in the Nation’s fight against COVID-19.  For more information about DoD’s prototype OT authority, see our prior posts GAO Continues to Expand the Scope of “Prototypes” DoD May Buy Through OTs and DoD’s Prototype OTA Guide Offers Insight into DoD’s Experiment in Regulation-Free Acquisition.

Like DoD, other agencies are seeking to use their OT authority to respond quickly to the COVID-19 crisis.  Pursuant to Section 3301 of the CARES Act, the Department of Health and Human Service’s Biomedical Advanced Research and Development Authority (“BARDA”) no longer requires a formal written determination to approve an OT expected to cost more than $100 million during a declared public health emergency.  For more information about BARDA OTs, see our prior post U.S. Government Announces New Federal Funding Opportunities Related to COVID-19.