Excitement Rises Among Catalyst Accelerator Cohort as they Discover OTAs

Other Transaction Agreements Offer Surprisingly Simple Way to Fund Prototypes, R&D and Follow-On Production

Six weeks into the first Catalyst Accelerator program, the inaugural cohort has developed a strong sense of camaraderie. Laughter abounds as they work together to understand the complexities of their business-building adventure. Hints of collaboration between some of the businesses are in the air, and a general feeling of accomplishment permeates the group.

This overall sense of well-being kicked up a notch on Tuesday, March 13, 2018, when retired Army Brigadier General Stephen B. Leisenring, Deputy Director of Colorado PTAC, delivered a stimulating 90-minute lecture on the utility of Other Transaction Agreements, or OTAs. Located here on the Catalyst Campus, Colorado PTAC – Procurement Technical Assistance Center – was the obvious choice to deliver the presentation. Colorado PTAC provides a wide range of government contract assistance, with a staff of experienced contracting and acquisitions counselors to help businesses navigate the arcane world of government contracts.

Also gathered, with plenty of guidance for the cohort, was the Space Enterprise Consortium (SpEC) program team from Air Force Space Command’s Space and Missile Systems Center Advanced Systems & Development Directorate. SpEC, among several high-level goals, works to attract, retain, and mentor consortium members to prepare them to compete for federally-funded space-related prototype projects. SpEC also minimizes barriers to entry for small, non-traditional businesses to work with the Government, and identifies research and prototyping teaming opportunities.

Deputy Director Stephen Leisenring’s introduction to OTAs began by describing their purpose, then listing all the things they are not: “The purpose of OTAs is to engage industry and academia to participate with the federal government in either research and development or in the production of prototypes. They are not standard contracts, they are not grants, they are not cooperative agreements – a CRADA [Cooperative Research and Development Agreement] is not an OTA. They are interesting anomalies.” Mr. Leisenring went on to explain that, although not every Federal agency has authority for OTAs, the list of those who do is long: Department of Defense, Federal Aviation Administration, Department of Transportation, Department of Homeland Security, Transportation Security Administration, Department of Health and Human Services and Department of Energy.

The founders in the audience were clearly intrigued as Mr. Leisenring outlined the significant differences between the less stringent OTAs and the traditional and far more cumbersome FAR [Federal Acquisition Regulation]-based government contracts. Flexibility was the number one distinction; while FAR-based contracts are hemmed in by 1000s of pages of regulations, OTAs are largely managed by a single Agreements Officer with broad authority to customize each contract using their highly-experienced judgment. Another positive aspect of OTAs revolves around intellectual property, which can often be shared or wholly retained under OTA agreements, whereas FAR-based contracts typically require the surrender of IP rights to the government. Other benefits include a heavy bias towards non-traditional defense contractors, more flexible funding arrangements with an option for some upfront payments and the possibility of continued, long-term relationships via follow-on, FAR-based contracts.

The flexibility of OTAs became even more obvious as Mr. Leisenring explained that OTA eligibility is dependent upon meeting only one of four possible conditions – with the final condition being an open invitation to even more flexibility:
• One non-traditional contractor participates to a significant extent OR
• All significant participants are small, or non-traditional contractors OR
• At least 33% of total prototype costs are other than Federal funds OR
• Agency Senior Procurement Executive determines in writing that there are
– Exceptional circumstances OR
– A unique opportunity to expand the defense supply base

The cohort raised many incisive questions throughout the presentation. In response to fears that Congress may soon tighten restrictions on OTAs, the Hon. Sue Payton, former Assistant Secretary of the Air Force (Acquisitions) and an expert member of the audience, chimed in: “Believe me, people are waiting, just waiting, to pounce on a big screw-up, so we’ve got to make sure we are doing this right.” Her remark was sobering and underlined a universal desire not to squander the innovative opportunities offered by OTAs in the current climate, where FAR-based acquisitions move at glacial speed compared to the accelerated research and development and more rapid prototyping possible under OTAs.

After an absorbing hour of discussion, founder Brandon Tripp, COO of XplotraX, exclaimed, “I’ll tell you, I’m loving these OTAs!” His enthusiasm was echoed in the grins of the other founders, who seemed thrilled to learn that there is such an attractive alternative to the FAR-based contracts they had learned about in recent conversations with a PTAC counselor.

During an October 19, 2017 speech, Air Force Director of IT Acquisition Process Development Maj Gen Sarah Zabel opined, “This mechanism [OTA] is just so much faster and so much more attuned to getting something quickly that we want today and not have to spend a couple years going through this huge process to get something we wanted two years ago. Everyone is very enthusiastic about OTAs.” 1 By the time the Other Transaction Agreement seminar ended, it was easy to see why this would be. An aura of hope surrounds these unique instruments designed to support non-traditional defense contractors while vastly simplifying the process of contracting with the government – and there seems little doubt that these mechanisms will allow the US to more easily stay abreast of both our allies and enemies in the ongoing race for technological advantage.

1. Source: https://federalnewsradio.com/acquisition/2017/10/ota-contracts-are-the-new-cool-thing-in-dod-acquisition/

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