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

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Presentation on theme: "Innovative Contracting Methods Shamelessly filched from Diane Sidebottom Distinguished Barrister and Attorney at Law (DARPA/DHS S&T/HSARPA) and bowdlerized."— Presentation transcript:

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 zCost-based pricing system ySpecialized accounting and audit systems yOversight Excesses zIntellectual property regime zContracting based on “regulation” rather than “agreement”

3 Diane’s Contracting Tool Box Acquisition Non-Acquisition Procurement Contracts Non-FAR Contracts GrantsCooperative Agreements OTs For Research *Other Transactions for Prototypes 10 U.S.C. 2371 note 6 U.S.C. 391 *NASA Space Act OMB Circ. DODGAR OMB Circ. DODGAR 10 U.S.C. 2304 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 31 U.S.C. 6304 6 U.S.C. 187 6 U.S.C. 188 *Non-appropriated funds contracts 10 U.S.C 2358 31 U.S.C. 6305 6 U.S.C. 187 6 U.S.C. 188 Traditional Lore 10 U.S.C. 2358 6 U.S.C. 187 6 U.S.C. 188 10 U.S.C. 2371 6 U.S.C. 391 10 U.S.C. 2371 6 U.S.C. 391 Flexible Recoupment Authority Multi-Party Commercial Firm Consortia Recoupment Authority Bailments Lease Arrangement Loan-to-Own Federal Acquisition Regulations PART 15 Cost/Price Based PART 12 Commercial Items Price Based CRADA - 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. OTs for Other

4 Two types of OTs zOTs for Research zOTs 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 zThe SECDEF shall ensure that: yTo the maximum extent practicable, no transaction for research duplicates research conducted under existing programs. yTo 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) zAdvance payment allowed zRecovery of government funds permitted zAnnual reports to Congress zFlexibility can be exercised in method of competition and contract terms

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

9 OTs for Research zAdvantages yAttracts technology firms that normally avoid DoD business yConcentrates effort upon technical results to maximize tailoring and minimize “contractual” concerns yLeverages research dollars through cost sharing yHarnesses incentive to develop and commercialize technology

10 OTs for Research yInvokes commercial-like practices, reducing Government intrusion and red tape yPromotes relationship of trust and spirit of cooperation with industry zDisadvantages yOften more time consuming than traditional cost-reimbursable R&D contracts yGreater participation demanded of Government program manager

11 Other Transactions for Prototypes DoD authority: Public Law 103-160, Sec. 845; as amended by 104-201, Sec. 804; as amended by 106- 398, 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? zAllows for flexibility in requirements zAllows for flexibility in teaming zAllows for flexibility in cost accounting, cost sharing and payment methods zAllows for flexibility in intellectual property negotiations

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

15 What’s a Prototype? zCan be - yEnd product the reasonably evaluates feasibility or operational military utility of a concept or system yAdvanced concept technology demonstrations yRisk reduction prototyping yTechnology demonstrations

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

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

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

19 Statutory Language zAdded by P.L. 106-398, Section 803 zWhen the OT is entered into, the team must have: y1/3 cost share of the total cost of the program, or yAt least one nontraditional defense contractor is participating to a significant extent, or ySenior procurement executive determines exceptional circumstances

20 OTs for Prototypes zWhat does the authority do for you? yRelief from FAR, DFARS, and supplemental regulations yFlexibility to use “best” practices yConducted outside of procurement laws and regulations yCompetition only to the maximum extent practicable yMust report to Congress once a year (DoD’s requirement goes away this year)

21 Other Transactions for Prototypes zWhat doesn’t apply to OT for Prototypes? yCompetition in Contracting Act (CICA) yTruth in Negotiation Act (TINA) yContract Disputes Act yProcurement Protest System yP.L. 85-804 and indemnification yCost plus a percentage of cost prohibition yProcurement Integrity Act yBuy American Act (in part)

22 Other Transactions for Prototypes zSome laws still do apply yCriminal laws (false claims/statements) yFederal fiscal laws yLaws of general applicability (e.g. Title VI, Civil Rights Act) yGeneral laws for doing business in the US (e.g. environmental laws, import/export control) zNo supporting regime of commercial law

23 Other Transactions for Prototypes zWhat are the limitations of the authority? yNo LRIP or production (yet) yMust transition into a standard FAR contract yConsiderations - competition, data rights, compliance with DoD 5000 or equivalent, documentation

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

25 Interesting aspects zNo changes clause zNo claims zNo termination for default or convenience zNo mandatory accounting system zNo required flowdowns to subcontractors

26 DARPA’s Other Transactions for Prototype zDARKSTAR zGLOBAL HAWK zCGS zArsenal Ship zLaser Comm zCOSSI zSubmarine Payload and Sensors zACN zSUO/SAS zUCAV zAdvanced Logistics zVTOL UAV zRST-V zTCDL zHummingbird zCANARD

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


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