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Innovative Contracting Methods

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Presentation on theme: "Innovative Contracting Methods"— 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
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.

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