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Other Transaction Authority

Other Transactions Authority (OTA) is the term commonly used to refer to the 10 U.S.C. 2371 authority to enter into transactions other than contracts, grants or cooperative agreements.  The Department currently has temporary authority to award “other transactions” (OT) in certain circumstances for prototype projects that are directly relevant to weapons or weapon systems proposed to be acquired or developed by the Department. OTAs may be used for basic, applied, advanced research and prototype projects when it has been determined that it is in the government’s best interest to enter into an agreement that is not a contract, grant, or cooperative agreement (per 10 U.S.C. 2371 and Section 845 of the National Defense Authorization Act (NDAA). OTAs are not covered by the FAR. OTAs are a highly flexible business tool, which require application of astute business acumen to ensure smarter, more efficient acquisition of prototype systems for the DoD. OTAs require a minimum of at least one non-traditional Defense contractor participating to a significant extent in the prototype project or a cost sharing arrangement requiring that at least one-third of the cost of the OTA come from non-federal sources.

This acquisition authority, when used selectively, is a vital tool that helps the Department achieve the civil and military integration that is critical to reducing the cost of defense weapon systems.

In accordance with statute, this authority may be used only when: 

    • There is at least one non-traditional defense contractor participating to a significant extent in the prototype project; or

    • No non-traditional defense contractor is participating to a significant extent in the prototype project, but at least one of the following circumstances exists:

      • At least one third of the total cost of the prototype project is to be paid out of funds provided by the parties to the transaction other than the federal government.

      • The senior procurement executive for the agency determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements or structures that would not be feasible or appropriate under a procurement contract.