Other Transaction Authority - PowerPoint Presentation

Slide1

Other Transaction Authority

Melissa DeLucaSupervisory Contract Specialist7 March 2018

*

Sta

te

m

e

nts

c

o

nta

i

n

e

d

w

i

th

i

n

t

h

e

se m

aterial

s

ar

e

s

olel

y

the

opi

n

io

n

o

f

t

he

a

uth

o

r

a

nd

d

o

n

o

t

rep

r

e

s

e

nt the

op

i

n

io

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o

f

the

Depa

r

tm

e

nt

o

f

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e

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e

ns

e

,

D

e

pa

r

tm

e

nt

o

f

the

Air Force

,

Hanscom

Air Force Base,

a

n

d/o

r

the

N

atio

n

a

l

Co

nt

r

ac

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M

a

n

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.

Slide2

Agenda

What is an Other Transaction?History of OTA/OTA TimelineTypes of Other TransactionsDefinition of a Prototype

Benefits of Other Transactions

Limitations

on the

use of OTA

What is a

Nontraditional

Defense Contractor?

What is Significant Participation?

What is Cost Sharing?

Delegation of

OTA

Acquisition Planning

OT Acquisition Approach

Competition

Slide3

Agenda (continued)

Intellectual PropertyComptroller General AccessProduction Other TransactionsRegulationsHow is OTA being executed within the DoD?

Consortiums

NDAA Language Related to OTA

What’s Next?

OTA Resources

References

Slide4

What is an Other Transaction?

A legally binding agreement other than a Procurement Contract, Grant, or Cooperative Agreement Defined by what it is NOT:Not

a

Procurement Contract

Generally not subject to Federal Laws and Regulations

Federal Acquisition Regulations (FAR)

do

not apply.

FAR Supplements do not apply i.e. DFARs, AFFARs

Not

a

Grant

, or

Cooperative Agreement

DoD Grants and Agreements Regulations (

DoDGARS

) does not apply.

Slide5

History of OTA

1958 – NASA granted first Authority to use OTs1972 – National Institute of Health granted OTA

1989 – DARPA granted OTs for Research

1994 – DARPA granted OTs for Prototype Projects

1995-2014 – Authority Granted to 8 other Agencies (11

Federal

A

gencies

total)

2016 – OTs permanently codified in

10 U.S.C.

§

2371b

Slide6

OTA Timeline

Slide7

Types of Other Transactions

Two Types of Other Transactions: Other Transactions for Prototype Projects (10 U.S.C. §2371b)Provide a direct benefit to the DoD

Considered

acquisition

i

nstruments

Other Transactions for Research

Provide stimulation or support of

research

Technology Investment Agreements (

TIAs)

This

Briefing only covers OTs for Prototype Projects

Slide8

Definition of a Prototype

There is no specific definition for a prototype.A prototype is…. “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.”

Slide9

Definition of Prototype (continued)

According to the DoD Other

T

ra

n

sacti

o

ns

Gui

d

e for Protot

y

pe

Pro

j

ects, (D

P

A

P

, Ja

n

u

a

ry

2

0

1

7

),

A

pr

o

tot

y

pe

pr

o

j

e

ct

can

g

e

n

e

ra

l

ly

be

d

e

scri

b

ed

as:

“[a]

preli

m

inary

pilot,

test,

evaluatio

n

,

de

m

onst

r

a

t

ion,

or

agile

develop

m

e

nt

activi

t

y

used

to

evaluate the

techni

c

al

or

m

anufa

c

t

u

r

ing

feasibili

t

y

or

m

ili

t

ary

utili

t

y

of

a

particular

technol

o

g

y

,

process,

concep

t

, end

ite

m

,

effect,

or

other

discre

t

e

feature.

Prototype

projec

t

s

m

ay

include

syste

ms

,

subsy

s

t

e

ms

, co

m

ponen

ts

,

m

aterials,

m

ethodolog

y

,

technolo

g

y

,

or

proces

s

e

s.

”

“By

w

ay

of

illustrati

o

n,

a

prototy

p

e

project

m

ay

involve:

a

proof

of

concept;

a

pilot;

a

novel ap

p

lication

of

co

mm

erci

a

l

technol

o

gies

for

defense

pu

r

pose

s

;

a

cre

a

tion,

design,

develo

pm

e

n

t

, de

m

onst

r

a

t

ion

of

technic

a

l

or

operatio

n

al

utili

t

y;

or

co

m

binati

o

ns

of

the

foregoi

n

g,

related

to

a protot

y

p

e

.

T

he

quanti

t

y

should

generally

be

li

m

ited

to

that

needed

to

prove

technical

or

m

anufa

c

t

u

ri

n

g feasibility

or

evaluate

m

ili

t

ary

utili

t

y

.”

Slide10

Benefits of Other Transactions

Access to cutting edge commercial technologiesAllows the Federal Government to leverage the private sector’s investments in research and developmentFlexibility in the development of articles

crafted

in

the agreement

Can design/implement innovative business models

Promotes the engagement of non-traditional and small business contractors

Flexibility to use “best practices”

Flexible

payment

p

rovisions

No mandatory Cost Accounting Standards

No mandatory Certified Cost or Pricing Data

Slide11

Limitation of Authority

Pursuant to 10 U.S.C. §2371b(d), Agencies are prohibited from entering into an OT for Prototype unless

At least one

nontraditional

d

efense

c

ontractor

is a

significant participant

in the prototype project, or

All

s

ignificant

p

articipants

in the transaction other than the Federal Government are

s

mall

b

usinesses

or

n

ontraditional

d

efense

Contractors

, or

A Cost Share of

at least 1/3 of the

total

c

ost

of the prototype project is to be paid out of funds provided by parties to the transaction other than the Federal Government, or

The Senior Procurement Executive for the agency determines in writing that exceptional circumstances justify the use of a transaction.

Slide12

What is a Nontraditional Defense Contractor?

New Definition tied to Cost Accounting Standards (CAS)An entity

that

is not

c

u

r

r

ently

pe

r

for

m

ing

and

has

not

pe

r

for

m

ed,

for

at least

the

one-year

period

pre

c

eding

the

soli

c

i

t

at

i

on

of

sou

r

ces

by

the DoD for

the

pro

c

ure

m

ent

or

tran

s

a

c

tion,

any

c

o

ntra

c

t or

s

u

b

c

ont

r

act

for

the

DoD that

is s

u

bje

c

t

to

full c

o

v

e

rage

und

e

r

the

c

o

st

a

c

c

o

unting

standards

pre

s

c

r

ibed

pu

r

s

u

ant

to se

c

t

i

on

1502

of

t

i

t

l

e 41

and

the

regulations

i

m

ple

m

ent

i

ng such

se

c

t

i

on.

Slide13

What is Significant Participation?

According to the Other Tra

n

sacti

o

ns

Gui

d

e for Protot

y

pe

Pro

j

ects, (D

P

A

P

, Ja

n

u

a

ry

2

0

1

7

), examples of Significant Participation are:

Supplying New Key Technology or products

Accomplishing a

Significant Amount

of

the effort

Causing a

Material Reduction

in

the

cost or schedule or

increase in performance in some other way

Nontraditional does not necessarily have to be a prime contractor -- can be a subcontractor , lower tier vendor, intra-company business unit or teamed with a traditional as long as participation is “significant” (DPAP, January 2017).

Determination of what is significant is a subjective decision. The determination of significant contribution should be included in the agreement file.

Slide14

What is Cost-Sharing?

Cost Sharing is only Applicable when:Neither a Nontraditional Defense Contractor nor a Small Business Concern is participating to a significant extent in the prototype project. 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.

Cost sharing should generally consist of labor, materials, equipment, and facilities costs (including allocable indirect costs

).

Slide15

What is Cost-Sharing? (continued)

Cost share amounts do not include costs that were incurred before the date on which the transaction becomes effective.However, costs that were incurred for a prototype project after the beginning of negotiations, but prior to award of the transaction may be considered non-Federal if:The costs were incurred in

a

n

tici

p

ati

o

n

of

e

n

teri

n

g

i

n

to the

t

ra

n

sacti

o

n;

a

n

d, if it

w

as

a

p

pr

o

pr

i

ate

for

t

he

p

a

rty

to i

n

cur the

costs b

e

fore

the

t

ra

n

sacti

o

n

b

e

came

e

f

fective

in

o

rd

e

r

to e

n

sure

the

succ

e

ssful im

p

l

e

me

n

tati

o

n

of the

t

ra

n

sacti

o

n.

This

must be determined in writing by the Agreements

Officer.

Slide16

Delegation of OTA

Statute gives authority to the Secretaries of Military Departments, the Director of the Defense Advanced Research Projects Agency (DARPA), or the Director of the Missile Defense Agency (MDA). Approval authority for projects under these instruments may be delegated to different levels dependent upon dollar value

At or below $50 Million

Depends on the Agency (can be delegated)

Over $50 Million up to $250 Million

Senior Procurement Executive for the Agency or the Director of DARPA or MDA

Over $250 Million

Under Secretary of Defense (AT&L), may not be delegated

Slide17

Acquisition Planning

Setting the FrameworkTeam Approach with continuous communicationAppropriate Safeguards

Good Business Acumen

Reasonable Price

Enforceability of schedule and other requirements

Appropriate Payment Arrangements

Skill and Expertise

Standard “one size fits all” model does not exist

Consider intent and protections typically provided by FAR clauses

If a policy or procedure,

or a

particular strategy or practice, is in the best interest of the Government and is not

specifically addressed

in this guide, nor prohibited by law or Executive Order, the Government team

should not

assume it is prohibited.

Slide18

Acquisition Planning (continued)

FlexibilityOther Transactions are just another tool in the toolbox.AgreementIndustry has cited concerns in areas such as cost accounting standards, intellectual property rights, and auditing.

Agreements

Officers should consider whether

the prototype

project’s performance requirements

lends itself to a fixed-price or expenditure-based arrangement.

Use of a contractor’s existing accounting system should be allowed provided it is adequate.

Competition Considerations

Slide19

OT Acquisition Approach

Formal Acquisition Strategy is not required Complexity and Dollar Value drive documentation requirementsApproach should address the following areas laid out in the DoD Other Transaction Guide:

Consistency with Authority

Rationale for Selecting the Use of OTA

Description of the Effort

Risk Assessment

Selection Process

Nature of the Agreement

Terms and Conditions

Follow-On Activities

Slide20

Competition

The Competiti

o

n in

C

o

n

tr

a

cting

A

ct

(CIC

A

),

Pu

b

. L.

No.

9

8

-3

6

9

(1

9

8

4

),

as a

m

ended

(i

n

clu

d

i

n

g

T

ruth

i

n

Negot

i

atio

n

s

)

d

o

es

n

ot

a

p

p

ly

.

Statute - The statute authorizing

DoD’s

use of OTs for Prototype Projects states that competitive procedures shall be used “to the maximum extent practicable”

(

10 U.S.C. §2371b

(b)(2)).

Guidance – “Competitions for OTs should be structured in a common sense manner that treats offerors fairly and, when applicable, be consistent with industry practice for that market segment. The multi-functional acquisition team is responsible for maximizing competition

.”.

While there is tremendous flexibility in how a competition is conducted, opportunities for OT awards must be handled in a manner that is fair, transparent, and

ethical.

Slide21

Intellectual Property

The Bayh-Dole Act,

prescribing

Go

v

ernment

’

s

rights

in

pat

e

ntable i

n

v

entio

n

s;

al

o

ng

w

i

t

h 10

U.S.C.

§

2320

“

R

i

g

hts

in

T

echn

i

cal

Da

t

a”,

and 10

U.S.C.

§

2321

“

V

al

i

dation

of

proprietary

data

res

t

rictions

”

, prescribing

Go

v

ernment

and Contractor

rights

to

technical

data

do

n

ot

apply

to

Other Transactions for Prototype Projects.

Intellectual

Property rights

are

negotiated on a project by project basis.

In a co

n

sorti

u

m

b

a

sed

b

l

a

n

ket

a

g

re

e

me

n

t

(

w

h

e

re

pr

o

j

e

cts

are

su

b

se

q

u

e

ntly is

sued

),

th

e

re

may

b

e

g

ene

r

a

l

IP

pr

o

vi

s

i

o

n

s

a

t the

ov

e

r

a

rc

h

i

n

g

a

g

r

ee

m

en

t

l

e

v

e

l

a

s a starti

n

g

p

o

i

nt

for

n

e

g

o

tiati

o

ns.

Ge

n

er

a

l

l

y

,

the

G

ov

e

rnm

e

nt

d

o

es

n

ot se

e

k

o

w

n

e

rsh

i

p

of

I

P

,

o

n

l

y

a l

i

ce

n

se

for Go

ve

r

n

m

en

t

u

s

e.

Bottom Line: Involve your program

counsel when discussing matters involving Intellectual Property.

Slide22

Comptroller General Access

Prototype Project Agreements entered into under 10 U.S.C. §2371b, which provide for total payments in excess of $5,000,000, shall provide for Comptroller General access to examine the records of any party to the Project Agreement.

But – the access requirement does not apply where an entity has not entered into any other contract, grant, cooperative agreement, or “other transaction” agreement that provides for audit access by a Government entity in the year prior to the date of the Project Agreement.

If an entity participating in the performance of the Project Agreement, has only performed under cooperative agreements or transactions that were entered into under 10 USC 2371 and/or 10 USC 2371b in the year prior to the date of the Project Agreement, then the only records the Comptroller General may examine are records of the same type as the records that the Government has had the right to examine under the audit access clauses of the previous agreements or transactions performed within the prior year.

Slide23

Production Other Transactions

Sole-Source Production

Follo

w

-On:

Pursuant

to

10

U.S.C.

§

2371b(f): “a transaction

entered

into

under

this

section

for

a

protot

y

pe

project

may provide

for

the

a

w

ard

of

a

follo

w

-on production

contract

or

tran

s

action

to

the

partic

ipants

in

the

transaction”

provided:

c

ompetitive

proc

e

dures

were

u

s

ed

for

the

s

election of

part

i

es

for

participat

i

on

in

th

e

trans

a

ction;

a

nd

the

partic

i

pa

nts

in

the

tran

s

action

s

u

c

c

e

s

sfu

l

ly

c

o

mpleted

the

prototype

project

pro

vided

for

in

the

tran

s

action.

Slide24

Applicable Regulations

10 U.S.C. §2371b

Procure

m

e

n

t

Integri

t

y

Act

D

oD

OT

Guide,

DPAP,

January

2017

F

ederal

F

iscal

Law

Agency Fiscal Regulations Apply – Consult Legal and Comptroller

Ar

m

s

E

x

port

C

ontrol

Act

(AE

C

A)

Intern

a

ti

o

nal

T

ra

f

fic

in

Ar

m

s

R

egulation

(I

T

A

R

)

E

x

port

Ad

m

inistrati

o

n

R

egulations

(EA

R

)

La

w

s

of

General

Applicability

Slide25

Regulations that do not apply

The following DO NOT apply to Other Transactions:Ba

y

h-

D

ole

Act

/

IP

Statutes

C

o

m

petition

in

C

ontracti

n

g

Act (

C

I

C

A)

T

ruth

in

N

egotia

t

io

n

s

Act

C

ontract

D

isputes

Act

Grants

and

Agree

m

ents

R

eg. (

D

O

D

GA

R

S)

F

ederal

Acquisition

R

egulation (

F

A

R

)

D

efense

F

ederal

Acquisition

R

egulation

Supple

m

ent

(

D

F

A

R

S)

GAO Protests

Agency-Level Protests and U.S. Court of Federal Claims

are applicable

Use of OT authority does not eliminate the applicability of all Laws and Regulations. Consult

your program

counsel whenever an OT is used.

Slide26

How is it being executed within the DoD?

Consortium ApproachAir Force Research Lab (Air Force Material Command) Space and Missile Systems Center (SMC)Wright Patterson Air Force Base (Air Force Material Command) - Using Government Point of Entry (FedBizOps or the like)

DARPA (website links to

FedBizOps

)

Defense Innovation Unit Experimental (DIUx) (Commercial Solutions Offering)

SMC

Slide27

What is a Consortium?

Dictionary Definition: Association of two or more individuals, companies, or organizations (or any combination of these entities) with the objective of participating in a common activity or pooling their resources for achieving a common goal.

Some benefits:

Allows for competition to be maintained

Promotes relationships between Industry and Government that otherwise may not have occurred

Better understanding of Government and Industry needs

Slide28

How does it work?

Government solicits on FedBizOps or GPE

Responses Analyzed

Consortium Selected based on selection criteria

OTA Consortium Member Agreement (CMA) is established

Other Transaction Agreement with Consortium is awarded

Consortium Member Agreement is between Consortium and Members

Government is not a party to the CMA

CMA is a separate legal instrument that includes terms and conditions not necessarily in

the OT

with

Consortium.

Slide29

How does it work? (continued)

Establish Membership Process for ConsortiumAdmission or Membership Fees

Low

barriers-to-entry for new members

Significant Nontraditional

membership

Breadth of Capabilities, Expertise, and Technology

Can provide quality control on proposals, reports, and invoicing.

Evaluation

factors established for each project awarded under

Consortium.

Every project is governed by the articles of the basic OT, but special articles may be negotiated on a

project-by-project

basis.

Slide30

National Defense Authorization Acts for FY16-FY18

FY2016 NDAASubtitle B — Amendments To General Contracting Authorities, Procedures, And Limitations Sec. 815. Amendments to other transaction authority

Slide31

National Defense Authorization Acts for FY16-FY18 (continued)

FY 2018 NDAASubtitle G - Provisions related to Other Transaction Authority and Prototyping

Section 861: Contract authority for advanced development of initial or additional prototype units.

Section 862: Methods for entering into research agreements.

Section 863: Education and training for transactions other than contracts and grants.

Section 864: Other transaction authority for certain prototype projects.

Section 865: Amendment to nontraditional and small contractor innovation prototyping program.

Section 866: Middle tier of acquisition for rapid prototype and rapid fielding.

Section 867: Preference for use of other transactions and experimental authority.

Section 868: Prototype projects to digitize defense acquisition regulations, policies, and guidance, and empower user tailoring of acquisition process.

Slide32

What’s Next?

Currently, there is not an update in the works for the DoD OTA Guide. A policy memorandum should be forthcoming referencing the updated thresholds for delegation of OTA coming out of the FY18 NDAA.

Slide33

OTA Resources

DoD OTA Guide for Prototype Projects, DPAP, January 2017https://www.acq.osd.mil/dpap/cpic/cp/docs/OTA_Guide%20(17%20Jan%202017)%20DPAP%20signature%20FINAL.pdf

DoD Centers of Excellence for OTs

Defense Advanced Research Projects Agency (DARPA): http://www.darpa.mil/

USAF: Transformational Innovation web page at http://www.transform.af.mil/

USA: http://acc.army.mil/contractingcenters/acc-nj/index.html

USN: https://www.nrl.navy.mil/

Slide34

References

10 U.S.C §2371 (b)DoD OTA Guide for Prototype Projects, DPAP, January 2017GAO Report, “Use of ‘Other Transaction’ Agreements Limited and Mostly for Research and Development Activities” dated January 2016 (https://www.gao.gov/products/GAO-16-209

)

Slide35

Questions

??