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1 [1] (December 19, 2024)

handle is hein.crs/goverta0001 and id is 1 raw text is: Congressional Research Service Infrnrning the legisitive debate since 1914 December 19, 2024 Defense Primer: Other Transactions (OTs) The Department of Defense (DOD) is authorized to enter into legally binding contracts, referred to as other transactions (OTs), to acquire goods and services in certain situations. OTs, in contrast to traditional procurement contracts, are exempt from many federal procurement laws and regulations. These regulatory exemptions give DOD greater flexibility in how OTs are structured, solicited, negotiated, and awarded, but they also render inapplicable various regulatory measures intended to promote transparency, accountability, and competition in government contracts. DOD has used its OT authorities with increasing frequency in recent years, which has prompted debate among Members of Congress about whether to increase statutory limits on their use. What follows is a discussion of how OTs are used and structured, how OT awards may be protested, recently implemented modifications to OT use, and considerations for Congress. OT Use DOD can generally use OT authorities for three activities: conducting research, developing prototypes, and starting follow-on production of successful prototype projects. DOD-specific OT authorities are codified at 10 U.S.C. §§ 4021 and 4022. Section 4021 authorizes DOD to use OTs to carry out basic, applied, and advanced research projects. Section 4022 empowers DOD to use OTs for certain prototype projects of $500 million or less and certain follow-on production projects of $100 million or less. Section 4022 may be used for projects exceeding those monetary limits only if DOD leadership determines in writing that the work performed is essential to meet critical national security objectives and informs Congress. DOD's director for contract policy in the Office of Defense Pricing and Contracting has stated that about 80% of DOD's OTs are for research and development, while a couple are for weapons and ammunition, electronic and communication equipment or professional services. OTs are exempt from multiple procurement-related statutory and regulatory requirements, such as those involving solicitation, publication, competition, and pricing. Parties to OTs are still subject to procurement ethics and national security requirements. DOD has issued an OT guide that provides additional guidance on OT use. DOD holds that OTs provide a number of benefits, including the flexibility necessary to adopt and incorporate business practices that reflect commercial industry standards ... and provide the government with access to state-of-the-art technology solutions. DOD encourages agencies using OTs to advertise outside of traditional government media, such as SAM.gov, to maximize outreach to industry, particularly nondefense contractors (NDCs). An agency does not need to issue a formal Request for Proposal (RFP) or follow the traditional contracting process of reviewing solicitations and may instead receive solicitations in the form of white papers and oral and panel presentations. OT Structures OTs can be structured in numerous ways, including a bilateral agreement between DOD and a single entity, joint ventures, and partnerships. DOD can also work with other federal agencies to fund an agreement encompassing multiple providers, including through a consortium (i.e., a group of organizations and entities, potentially including industry, that focus on a specific technology area). Examples of DOD consortia include the Defense Industrial Base Consortium and the DOD University Consortium for Cybersecurity. DOD may also structure OTs as a commercial solutions opening-a special process for the acquisition of innovative solutions, to close capability gaps, or for meaningful proposals with varying technical or scientific approaches. CT Award Protests As discussed in this CRS report, federal law allows contractors to protest (i.e., object to) standard procurement contract awards that they believe violate laws or regulations. Bid protests are generally brought before either the Government Accountability Office (GAO), as provided by the Competition in Contracting Act (CICA), or the U.S. Court of Federal Claims (CFC), pursuant to the Tucker Act. The Tucker Act provides the CFC with exclusive federal court jurisdiction over claims involving federal procurement contracts or in connection with a procurement or a proposed procurement. In contrast, Congress has not expressly established a bid protest process for OTs, which has raised questions about whether OT awards are reviewable and, if so, in what forum. These questions have become particularly relevant since Congress expanded DOD's OT authority to include acquisition of follow-on production in 10 U.S.C. § 4022. GAO has determined that it generally lacks jurisdiction over OT-related bid protests except for challenges over whether agencies improperly used OTs for procurements. In a 2024 protest decision, GAO also determined that it has jurisdiction over protests of multi-phase OT awards that operate in a manner similar to a down-select or competitive range process that agencies may use to eliminate non-viable or low-scoring proposals from consideration for a potential future procurement contract.

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