Enabling Government to Attract Innovation that Serves the Nation – The Case of “OTAs”

In the more than six decades since “Other Transactions Authority” (OTA) was authorized, OTAs have become a vital part of the Department of Defense (DOD) research process, and are now increasingly used by other agencies seeking to drive innovation through their programs and services. OTAs follow statutory provisions that allow certain federal agencies to enter into transactions with commercial entities using nontraditional procurement methods and contract terms.

The greater prevalence of OTAs has raised a number of questions about their use, including: 

• To what extent do agencies use different strategies to award OTAs?
• How effective are OTAs in achieving their stated goals of attracting new and innovative solutions and providers to government?
• To what extent do OTAs align, or not, with the tenets of public procurement?
• How prepared are government agencies to utilize OTAs effectively?
• How does the changing technology landscape impact the need or value of OTAs?

Exploring the answers to these and other questions and challenges to OTAs is the subject of a new IBM Center for The Business of Government report, Other Transactions Authorities:  After 60 Years, Hitting Their Stride or Hitting the Wall?  In this report, co-authors Jason Knudson, Stan Soloway and Vincent Wroble address how OTAs have evolved over the last several decades; how different Defense agencies have used OTAs; what that experience teaches other agencies about using OTAs effectively; and the impact of OTAs on the COVID-19 vaccine initiative. The report also identifies key challenges for OTA use, including cybersecurity, socioeconomic objectives to promote a diverse supplier base, acquisition workforce skills, and how OTAs enable production of public goods and services.

The report describes how OTAs represent invaluable tools and offer an increasingly common, viable alternative to traditional, FAR-based procurements. As their use grows, the OTA process itself will need to mature as well, to ensure that OTAs continue to align with the key precepts of public procurement.

The report concludes with findings and recommendations on how to improve OTAs, including how they can best be advanced as part of a larger procurement innovation landscape.  Specifically, the authors make several principal findings for more effective implementation of OTAs:

1. OTAs do not represent a significant departure from the principles of public procurement—competition, transparency, and accountability. This suggests that OTAs can serve a broader set of government needs than has occurred to date.
2. The advent of “production authority”—the single most important advance in OTA policy in decades—has yet to meet its intended goal of incentivizing more innovation and more nontraditional contractors to participate in the transition from prototype OTAs to scale contracts and equally importantly, to remain a part of the government’s solutions ecosystem.
3. Current challenges with OTAs emerge principally from the realities of the traditional acquisition culture, workforce capability gaps and underinvestment in workforce development.
4. Substantial improvement in data collection and access will foster the kind of insight into OTAs needed to fully assess their efficacy. Significant data gaps exist, and available data is not widely shared.

This report concludes by offering several recommendations, including removing FAR clauses from OTAs, developing socioeconomic policies compatible with OTAs, launching organizational and workforce development initiatives to build an OTA-savvy leadership and workforce, and improving data sharing and oversight across industry consortiums that often implement OTAs.