Other Transaction (OT) Agreement

Also called: OTA, Other Transaction Authority, prototype OT, research OT

An other transaction (OT) is a legally binding agreement that is not a standard procurement contract, grant or cooperative agreement; DoW uses OT authority for research, prototype projects and follow-on production.

OTs for prototype projects are not FAR procurement contracts and generally are not subject to the laws and regulations that apply only to contracts, grants and cooperative agreements. They are not 'anything goes', though: the Procurement Integrity Act and fiscal law still apply, and competitive practices should be used to the maximum extent practicable.

10 U.S.C. 4021 authorizes research OTs for basic, applied and advanced research, and these carry no follow-on production authority. 10 U.S.C. 4022 authorizes prototype projects directly relevant to the mission effectiveness of department personnel, or to platforms, systems, components or materials the department acquires, develops or uses.

A prototype OT under 4022 needs at least one of four conditions. The first is a nontraditional defense contractor or nonprofit research institution participating to a significant extent. The second is that all significant participants are small businesses or nontraditional defense contractors. The third is that at least one third of the total cost comes from non-federal sources, and the fourth is a senior procurement executive's written finding of exceptional circumstances.

A prototype OT may provide for a follow-on production contract or transaction to its participants. That award needs no further competition if competitive procedures were used to select the participants and they successfully completed the prototype project.