United States: Acquisition Disruption – Innovative Concepts In Government Contracting

Last Updated: February 23 2018
Article by Tina D. Reynolds and Victoria Dalcourt

Government procurement often gets a (not altogether undeserved) bad rap as a cumbersome process that is lacking in imagination and innovation. Today more than ever, however, the federal government is making use of cutting edge procedures and methods to attract commercial companies to government contracting and to encourage modernization and efficiency in procurements. Below we discuss some of the creative tools being used to benefit both contractors and the government, including other transaction agreements, contests, public-private partnerships, and other novel approaches.

Other Transaction Authority/Other Transaction Agreements

"Other transaction authority" is used by select federal agencies to obtain or to advance research and development in areas of importance to the government and, often, to the general public. The resultant contract is an "other transaction agreement" or "OTA." This term is not defined by statute or regulation; it is best defined by what it is not. An OTA is not a procurement contract, grant, or cooperative agreement. It is a different type of agreement with the government – one that is not subject to the strict regulatory regimes that characterize other types of contracting.

Only those agencies that have been granted specific authority may enter into an OTA. NASA was the first agency to be given other transaction authority, in 1958. See National Aeronautics and Space Act, 42 U.S.C. § 247(c)(5). Congress gave the Department of Defense (DoD) other transaction authority for research projects in 1990 (see 10 U.S.C. § 2371) and, more recently, for prototypes (see 10 U.S.C. § 2371b). Multiple DoD components now use OTAs, including the Air Force, Army, Defense Advanced Research Projects Agency (DARPA), Defense Threat Reduction Agency, the Office of Naval Research, and the U.S. Special Operations Command.

Other agencies using OTAs for research and development and/or prototype activities include:

  • the Federal Aviation Administration;
  • the Department of Homeland Security, including the Transportation Security Administration and the Science and Technology Directorate;
  • the Department of Energy (DOE), including the Domestic Nuclear Detection Office, Advanced Research Projects Agency-Energy, and Office of Energy Efficiency and Renewable Energy;
  • the Department of Transportation (DOT), including the Pipeline and Hazardous Materials Safety Administration; and
  • the Department of Health and Human Services (HHS), including the National Institutes of Health (NIH), the Biomedical Advanced Research and Development Authority (BARDA), and the Office of the Assistant Secretary for Preparedness and Response.

As a general rule, acquisition-related regulations and statutes, such as the Competition in Contracting Act, Contract Disputes Act, and the Federal Acquisition Regulation (FAR), do not apply to OTAs. Similarly, the various laws and regulations concerning intellectual property rights and cost accounting/pricing do not apply to OTAs (although OTAs generally do contain provisions addressing such topics as IP rights and cost accounting, and sometimes those provisions hew closely to what would otherwise be found in a procurement contract).

Due to this easing of restrictions, OTAs encourage participation by private sector sources of valuable R&D skills (sometimes referred to as non-traditional sources) that might be unwilling or unable to enter into a standard government contract, grant, or cooperative agreement.

Before a contracting official can use an OTA, most agencies first require that the contracting official determine that a procurement contract, grant, or cooperative agreement is not appropriate or feasible. Several agencies' regulations state that agency contracting officials cannot use an OTA to attract a commercial source when the principal purpose of the research is to directly benefit the government and that it is only when more widespread national security or national welfare interests are at stake that an OTA is appropriate. Because of these restrictions on the use of OTAs, they remain less common than other contracting vehicles.

One obvious benefit is that OTAs can be more flexible and responsive than traditional contracting instruments. OTAs can be tailored to the needs and circumstances of the program and the participants. They often include some degree of cost-sharing, allowing the government to stretch its research dollars. Cost-sharing might include actual cash contributions, or may involve the use of equipment, facilities, and other assets. OTAs also can free up government procurement personnel, particularly when contractors are selected to run consortiums whose members compete for OTAs. In these situations, the government will announce its interest in receiving from consortium members white papers that address a particular topic or problem, and based on these papers, the contractor or agency may select a number of consortium members to submit more formal proposals, followed by a further downselect process.

A potential downside to the use of an OTA is the added risk to the government due to less stringent oversight and regulation. In addition, it is difficult to assess the frequency and effectiveness of the use of OTAs by agencies because traditional reporting requirements and recordkeeping are not consistently followed.

We expect to see an uptick in the use of OTAs in the near future, particularly in light of the DoD's expanded OTA authority. The 2016 NDAA made DoD's OTA authority more permanent, and subsequently 2017 was a milestone year for DoD contractors, with a significant increase in the use of OTAs. The 2018 NDAA further encouraged use of OTAs by including a specified preference for the use of OTAs for prototypes.

As an example of recent OTA activity, the Navy's Space and Naval Warfare Systems Command (SPAWAR) recently announced a forthcoming OTA procurement called the Information Warfare Research Project (IWRP). Under IWRP, SPAWAR plans to spend about $100 million on cybersecurity-related prototypes in areas including cyber warfare, cloud computing, data analytics, assured command and control, and embedded systems in the "Internet of Things." As is common with other OTA projects, SPAWAR intends to hire a third-party firm to manage a consortium of potential bidders for the OTA project work. Consortium members will likely include both traditional and non-traditional defense contractors. The members would compete for individual projects by submitting proposals in response to requests for proposals.

Research-focused organizations such as the NIH, DARPA, and the Intelligence Advanced Research Project Activity (IARPA) have also expressed the willingness to consider using OTAs, particularly where non-traditional contractors are involved.

Contests

Another innovative approach to federal procurement involves the use of contests. The best example is the Challenge.gov website operated by the General Services Administration. The site is a listing of challenge and prize competitions run by federal agencies to crowdsource solutions to various problems. More than 100 agencies have engaged in competitions, including the DoD, DOE, Federal Trade Commission, NASA, HHS, U.S. Mint, Department of Labor, Department of Agriculture, and the Department of the Interior. A recent review of current challenges includes contests by the National Institute of Standards and Technology, the Environmental Protection Agency (EPA), the National Science Foundation, the Office of the Director of National Intelligence, and the U.S. House of Representatives, among others.

Members of the public can search and review hundreds of open competitions, and can submit a response by creating a free account. Some contests are even specifically designed for select groups, such as high school students. To register, all one need do is create a username and password, and provide an email address. The agencies pay prize money to those contestants who meet specified criteria and competition rules.

Challenge.gov is an outgrowth of the 2009 Strategy for American Innovation outlined by President Obama and a subsequent Office of Management and Budget memorandum providing guidance for agencies wishing to use prizes to stimulate innovation. On January 4, 2011, President Obama signed Public Law 111-358, the America COMPETES Reauthorization Act, which added section 24 (Prize Competitions) to the Stevenson-Wydler Technology Innovation Act of 1980, to provide agencies with authority to conduct prize competitions in order to spur innovation, solve tough problems, and advance their core missions.

Other contests used by government include:

  • The "ThunderDrone" competition, a rapid prototyping event, where unmanned aerial vehicles are tested to gather data relevant to drone operations. The first competition was held in 2017 and hosted by SOFWERX, a public-private technology incubator created under a partnership agreement between Doolittle Institute and the U.S. Special Operations Command (USSOCOM). The contest pitted small drones against each other to demonstrate new unmanned capabilities, such as drone swarming. On January 29-31, 2018, SOFWERX and USSOCOM hosted the second ThunderDrone Rapid Prototyping Event (RPE) Tech Expo, which focused on Counter Small Unmanned Aerial Systems (C SUAS). Top performers from this demonstration event will compete for cash awards in a final evaluation event (nicknamed the "Game of Drones") in Las Vegas, NV in June 2018.
  • IARPA prize challenges, listed on IARPA's own site, akin to Challgenge.gov. (In fact, many of the challenges listed here are also posted to Challenge.gov.). Recent contests ask competitors to create a method to forecast geopolitical events, to build a functional map of the world from satellite imagery, and to improve facial recognition and fingerprint recognition technology.
  • EPA prize challenges, which include contests to develop advanced septic systems to manage nutrient pollution, to come up with air quality monitoring systems for use during wildfires, and to retrofit existing chemical screening technologies to more accurately take into account metabolic processes.

Public-Private Partnerships

In addition to the aforementioned SOFWERX, which runs the CyberDrone competition, a number of other public-private partnerships are providing innovation in government contracting.

For example, several agencies run incubator programs that target startups or non-traditional contractors. One of the most well-known examples is DoD's Defense Innovation Unit Experimental or DIUx. See https://www.diux.mil/portfolio. The goal of DIUx is to attract nontraditional suppliers to address defense challenges by using proposal submission formats familiar to commercial technology firms. Companies can quickly enter into contracts that have a faster turnaround time and are more flexible than traditional contracts, such as OTAs. DIUx has offices in Silicon Valley, Boston, and Austin – cities known for attracting new, entrepreneurial businesses. For more details about how DIUx works with private firms, see this Rand Foundation report: https://www.rand.org/content/dam/rand/pubs/working_papers/WR1100/WR1177/RAND_WR1177.pdf. DoD announced in October 2017 that DIUx saw the first of its pilot projects turned into a full OTA contract. The OTA, with commercial cybersecurity firm Tanium, was a five-year, $750 million contract with the Army for cybersecurity services.

Other incubator programs include:

Other examples of innovative partnerships between agencies and industry include the intelligence agencies' use of INCUTEL as a purchasing agent, the CIA's Silicon Valley outreach program and outreach to academia (which includes interactions without any exchange of funds, such as peer review by students and companies), private sector externships (again, the CIA has an established program in this space), "Shark Tank"-like presentations by industry (the Defense Health Agency has recently used such a format for the sharing of ideas), and short term talent sharing (the InterGovernmental Personnel Act permits temporary hiring from industry for short term government needs).

Broad Agency Announcements

Another federal procurement method used by agencies involves Broad Agency Announcements (BAAs). BAAs are used by agencies to communicate their research interests to private companies. The announcements solicit scientific and research proposals from the private sector and include criteria for selecting proposals for the award of research and development (R&D) contracts, grants, or OTAs. During the selection process, proposals are subject to peer or scientific review. See FAR 6.102(d)(2). BAAs are competitive procedures that meet the statutory requirement for full and open competition. See FAR 6.102(d)(2). However, they can only be used in situations in which meaningful proposals with varying scientific or technical approaches can reasonably be expected. See FAR 35.016.

Among the agencies using BAAs are:

  • DoD;
  • DoT;
  • the Food & Drug Administration;
  • the Department of Commerce;
  • DARPA;
  • NIH; and
  • USAID.

Like traditional procurement contracts, BAA opportunities can be found on Grants.gov and FedBizOpps.gov. They also are advertised directly on participating agency websites.

In sum, federal agencies have numerous tools at their disposal to attract non-traditional contractors to the space, and to more rapidly innovate in a business-friendly way. Potential contractors should seek out these opportunities, and government agencies should consider expanded use of these mechanisms to attract new entrants into the contracting arena.

*Victoria Dalcourt is a Law Clerk in our Washington, D.C. office and not admitted to the bar.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Tina D. Reynolds
Victoria Dalcourt
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions