The most common question we hear from clients about the recent boom in the Department of Defense’s spending on other transactions, or OTs, is a simple one: How can I get in on the action? Understandably, OTs – essentially contracts not subject to procurement laws or regulations like the Federal Acquisition Regulation (“FAR”) – are very enticing to traditional and nontraditional contractors alike. And opportunities for OTs abound, particularly since Congress, in 2015, codified the DoD’s authority to award OTs for “prototype projects” (previously just a pilot program) and expanded that authority to include OTs for follow-on production efforts. But there are limits to DoD’s authority, foremost being that, in general, DoD may acquire only “prototypes” through OTs, and must buy all other goods and services through traditional, FAR-based procurement contracts. So the question of how to access DoD’s surge in OT funding hinges, among other things, on more specific questions: What exactly is a “prototype,” and do my offerings fit the bill?
The answers, it seems, are quite a lot and probably yes. Congress provided very little legislative direction, instead leaving to DoD the decision over just how broad its authority might reach. Unsurprisingly, it took a broadminded approach to the term “prototype,” and so far the Government Accountability Office (“GAO”), as legislative oversight, has upheld the DoD’s expanding interpretation. This continued in ACI Technologies, Inc., B-417011, Jan. 17, 2019, 2019 CPD ¶ 24, where the GAO found the DoD properly awarded a prototype OT for, among other things, training programs, skills development outreach, and the drafting of best practices for fostering commercial development of secure electronic parts.
Specifically at issue in ACI Technologies was a solicitation by the Naval Surface Warfare Center seeking a firm to manage a consortium of contractors in support of the agency’s Strategic & Spectrum Missions Advanced Resilient Trusted Systems (“S2MARTS”) initiative. This initiative’s stated goal is to obtain “innovative technological solutions to address current and future security threats in the electromagnetic spectrum (EMS), trusted microelectronics, and strategic missions hardware environments,” which includes “developing a relationship with industry and academia to establish streamlined processes for obtaining innovative, State-of-the-Art (SOTA) technologies” and “establishing an agile and collaborative working relationship amongst the Government and academia/industry.” The solicitation sought a consortium manager to oversee the consortiums’ members as they submit white papers and proposals for OT prototype projects in a number of technology areas, including the following:
Technology Area No. 8: Outreach and Standards – Develop standards and practices to foster commercial development of secure, trusted and assured parts. Document and promulgate security-enhancing design practices across government, industry, and academia in the areas of standard program outreach material; standard training material; Government and industry standards and best practices; and self-service libraries of standards and best practices.
Technology Area No. 18: Microelectronics and Electronic Warfare focused Workforce Development – Develop access to training and skill development for university, DoD, and small businesses. This includes SOTA processes for test articles and training; promoting design challenges and hacks around hardware intellectual property (IP) development/assurance.
ACI Technologies, which currently supports the Navy Electronics Manufacturing Center of Excellence (“NEMCOE”) under a long-term contract to improve the quality and practices of firms supplying advanced electronics technologies to the DoD, protested the S2MARTS solicitation arguing that, not only were the services described duplicative of ACI Technologies’ efforts with the NEMCOE, but they also could not reasonably be described as a “prototype project” as contemplated in DoD’s OT authority. The GAO disagreed.
Recognizing Congress did not define the term “prototype” in 10 U.S.C. § 2371b, the GAO turned to DoD’s internal guidance, which at the time the solicitation was issued defined a prototype as:
[A] preliminary pilot, test, evaluation, demonstration, or agile development activity used to evaluate the technical or manufacturing feasibility or military utility of a particular technology, process, concept, end item, effect, or other discrete feature. Prototype projects may include systems, subsystems, components, materials, methodology, technology, or processes. By way of illustration, a prototype project may involve: a proof of concept; a pilot; a novel application of commercial technologies for defense purposes; a creation, design, development, demonstration of technical or operational utility; or combinations of the foregoing, related to a prototype.
See 2017 Department of Defense Other Transactions Guide for Prototype Projects (Jan. 2017). This definition has since been replaced, in December 2018, with an even broader definition of “prototype project”:
[A] prototype project addresses a proof of concept, model, reverse engineering to address obsolescence, pilot, novel application of commercial technologies for defense purposes, agile development activity, creation, design, development, demonstration of technical or operational utility, or combinations of the foregoing. A process, including a business process, may be the subject of a prototype project.
Although assistance terms are generally not appropriate in OT agreements, ancillary work efforts that are necessary for completion of the prototype project, such as test site training or limited logistics support, may be included in prototype projects. A prototype may be physical, virtual, or conceptual in nature.
Before the GAO, the Navy argued that both technology areas at issue fell within these definitions because they “establish a beginning and not an end state” in DoD’s assessment of rapidly developing technologies, pointing out that the guidance expressly included “processes” and any “preliminary pilot, test, evaluation, demonstration, or agile development activity used to evaluate the technical or manufacturing feasibility or military utility of a particular . . . process.” The GAO found the agency’s explanation to be reasonable.
More precisely, the GAO found ACI Technologies failed to “demonstrate that the relevant statutes or the 2017 DoD Guide expressly define developing standards and practices, developing of training materials, or training of military personnel as activities outside the scope of a prototype project,” and had failed to “explain why the solicitation anticipates work that goes beyond a ‘preliminary’ stage.” Given the breadth of the definitions provided in statute and the DoD Guide, and that neither expressly identifies any activities outside the scope of a prototype project, the GAO has set a seemingly insurmountable bar for showing the DoD is overstepping its prototyping bounds.
As DoD continues to test the limits of its OT authority, we expect the GAO to play a critical role in defining just how far that authority extends. It appears, from ACI Technologies and other recent cases, the Office has little intent to pull on DoD’s reins without further direction from Congress, as least regarding the types of prototype projects eligible for OT awards. Until Congress provides such direction, procuring officials and industry participants should hop on for the ride.
 This statement is a bit oversimplified. The DoD also has two other OT authorities: First, under 10 U.S.C. § 2371, DoD may enter into OTs for basic, applied, and advanced research projects, although, unlike prototype OTs, these research OTs are not to acquire goods to services, but to support industry research. Second, pursuant to 10 U.S.C. § 2373, DoD may use OTs to buy “ordinance, signal, chemical activity, transportation, energy, medical, space-flight, telecommunications, and aeronautical supplies, including parts and accessories, and designs thereof” that are “necessary for experimental or test purposes.” See 10 U.S.C. § 2373(b) (stating such purchase may be “by contract or otherwise” and that general procurement statutes will apply “only when such purchases are made in quantities greater than necessary for experimentation, technical evaluation, assessment of operation utility, or safety or to provide a residual operational capability”).
 In drafting 10 U.S.C. § 2371b, Congress offered only that the prototype projects must be “directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or to improvement of platforms, systems, components, or materials in use by the armed forces.” Although DoD’s mission is diverse, one hopes most everything it does will “enhance the effectiveness” of our armed forces and the platforms they use in some way or another.
 As we have previously discussed on this blog, although the GAO will not review the award of an OT or the terms of a solicitation for OT awards, it will review a timely protest that an agency is improperly using an OT where a procurement contract is required. See 4 C.F.R.
§ 21.5(m); Blade Strategies, LLC, B-416752, Sept. 24, 2018, 2018 CPD ¶ 327 at 2.
 The GAO dismissed ACI Technologies’ allegations of duplicative research for failing to state a sufficient factual or legal basis for protest.
*Victoria Dalcourt Angle is a member of the firm’s Government Contracts practice and not yet admitted to the bar.
not admitted to the bar.