1. Innovative Contracting Methods
Shamelessly filched from
Diane Sidebottom
Distinguished Barrister and Attorney at Law
(DARPA/DHS S&T/HSARPA)
and bowdlerized for this occasion

2. Impedimenta to Commercial Firms
Cost-based pricing system
Specialized accounting and audit systems
Oversight Excesses
Intellectual property regime
Contracting based on “regulation” rather than “agreement”

3. Cooperative Agreements
Diane’s Contracting Tool Box
Acquisition
Non-Acquisition
Procurement
Contracts
Non-FAR
Contracts
OTs
For Research
Grants
Cooperative Agreements
OTs for
Other
10 U.S.C. 2304
*Non-appropriated
funds contracts
10 U.S.C. 2358
10 U.S.C 2358
10 U.S.C. 2371
6 U.S.C. 391
10 U.S.C. 2371
6 U.S.C. 391
31 U.S.C. 6303
6 U.S.C. 187(b)(3)
6 U.S.C. 188(b)(1)(C)
10 U.S.C. 2358
6 U.S.C. 187
6 U.S.C. 188
31 U.S.C. 6305
6 U.S.C. 187
6 U.S.C. 188
31 U.S.C. 6304
6 U.S.C. 187
6 U.S.C. 188
*Other Transactions
for Prototypes
10 U.S.C note
6 U.S.C. 391
Traditional
Flexible
Multi-Party
Commercial
Firm
Consortia
Bailments
Lease
Arrangement
Loan-to-Own
Federal
Acquisition
Regulations
OMB Circ.
DODGAR
OMB Circ.
DODGAR
Recoupment
Authority
Recoupment
Authority
PART 15
Cost/Price
Based
PART 12
Commercial
Items
Price Based
*NASA Space Act
Lore
A legal agreement between a federal laboratory and industry used for the transfer of commercially useful technologies from federal laboratories to the private sector and to make accessible unique technical capabilities and facilities.
CRADA -

4. Two types of OTs
OTs for Research
OTs for Prototypes

5. Other Transactions for Research
The Secretary of Defense (acting through DARPA) and Secretaries of the Military Departments may enter into transactions (other than contracts, cooperative agreements and grants) for basic, applied and advanced research projects
(10 U.S.C. 2371)

6. Other Transactions for Research
The SECDEF shall ensure that:
To the maximum extent practicable, no transaction for research duplicates research conducted under existing programs.
To the extent that the Secretary determines practicable, the funds provided by the government do not exceed the total amount provided by other parties to the other transaction.

7. Implementation of OTs for Research (continued)
Advance payment allowed
Recovery of government funds permitted
Annual reports to Congress
Flexibility can be exercised in method of competition and contract terms

8. Implementation of OTs for Research (continued)
Flexible Relationships – Partnerships, consortia or teams instead of primes and subcontractors
Intellectual Property - Minimal government rights may be appropriate
Payments - Milestones or other methods versus cost-reimbursement

9. OTs for Research Advantages
Attracts technology firms that normally avoid DoD business
Concentrates effort upon technical results to maximize tailoring and minimize “contractual” concerns
Leverages research dollars through cost sharing
Harnesses incentive to develop and commercialize technology

10. OTs for Research Disadvantages
Invokes commercial-like practices, reducing Government intrusion and red tape
Promotes relationship of trust and spirit of cooperation with industry
Disadvantages
Often more time consuming than traditional cost-reimbursable R&D contracts
Greater participation demanded of Government program manager

11. Other Transactions for Prototypes
DoD authority:
Public Law , Sec. 845; as amended by , Sec. 804; as amended by , Sec. 803
DHS authority:
6 U.S.C. 391
USD(AT&L) Guide 21 Dec 2000

12. Other Transactions for Prototypes - Legislation
The Director of DARPA and the Secretaries of the Military Departments may use Other Transactions for prototype projects that are directly relevant to weapons or weapons systems proposed to be acquired or developed by DOD.

13. Why use an Other Transaction for Prototype?
Allows for flexibility in requirements
Allows for flexibility in teaming
Allows for flexibility in cost accounting, cost sharing and payment methods
Allows for flexibility in intellectual property negotiations

14. Why use an Other Transaction for Prototype?
Allows for flexibility in solicitation and source selection methods as well as administration procedures and processes
Allows award of a long term agreement where terms and conditions are negotiated and added by phase
Allows for a culture shift in both industry and government

15. What’s a Prototype? Can be -
End product the reasonably evaluates feasibility or operational military utility of a concept or system
Advanced concept technology demonstrations
Risk reduction prototyping
Technology demonstrations

16. What’s a Prototype? Additional follow-on development may be required
Development of “pre-production” prototype also falls within the interpretation
A prototype may be more than one
A prototype may be physical or virtual

17. Other Transactions for Prototypes
“directly relevant to weapons or weapon system proposed to be acquired or developed”
Broadly interpreted to include training, simulation, support equipment
“Weapon system” can be offensive or defensive

18. Other Transactions for Prototypes
Development of a weapon is not required
“Proposed to be acquired” does not mean a formal requirement has been established
Can be sub-systems and component technology
Something DoD could buy if the prototype proves out

19. Statutory Language Added by P.L. 106-398, Section 803
When the OT is entered into, the team must have:
1/3 cost share of the total cost of the program, or
At least one nontraditional defense contractor is participating to a significant extent, or
Senior procurement executive determines exceptional circumstances

20. OTs for Prototypes What does the authority do for you?
Relief from FAR, DFARS, and supplemental regulations
Flexibility to use “best” practices
Conducted outside of procurement laws and regulations
Competition only to the maximum extent practicable
Must report to Congress once a year (DoD’s requirement goes away this year)

21. Other Transactions for Prototypes
What doesn’t apply to OT for Prototypes?
Competition in Contracting Act (CICA)
Truth in Negotiation Act (TINA)
Contract Disputes Act
Procurement Protest System
P.L and indemnification
Cost plus a percentage of cost prohibition
Procurement Integrity Act
Buy American Act (in part)

22. Other Transactions for Prototypes
Some laws still do apply
Criminal laws (false claims/statements)
Federal fiscal laws
Laws of general applicability (e.g. Title VI, Civil Rights Act)
General laws for doing business in the US (e.g. environmental laws, import/export control)
No supporting regime of commercial law

23. Other Transactions for Prototypes
What are the limitations of the authority?
No LRIP or production (yet)
Must transition into a standard FAR contract
Considerations - competition, data rights, compliance with DoD 5000 or equivalent, documentation

24. Other Transactions for Prototypes
Sound business judgment is absolutely necessary
Contracts/Legal/Program/Financial team is very important
Other Transactions are different and present interesting culture problems on both sides

25. Interesting aspects No changes clause No claims
No termination for default or convenience
No mandatory accounting system
No required flowdowns to subcontractors

26. DARPA’s Other Transactions for Prototype
DARKSTAR
GLOBAL HAWK
CGS
Arsenal Ship
Laser Comm
COSSI
Submarine Payload and Sensors
ACN
SUO/SAS
UCAV
Advanced Logistics
VTOL UAV
RST-V
TCDL
Hummingbird
CANARD

27. CONCLUSION
OT flexibility, properly used, is important to further our mission of creating and promoting new technologies, especially from “non-traditional” sources.