OTA_Symposium10Apr19.pdf

Source Selection Support Center of Excellence ~ S3CoE

U.S. Army Contracting Command

ACC APG S3CoE SYMPOSIUM SERIES Other Transaction Agreements (OTAs) 10 April 2019

UNCLASSIFIED

Agenda

Welcome Share Ground Rules and Fundamental Principles Define Other Transaction Authorities and Agreements Discuss lessons learned and best practices with the Consortia and

Industry Panel Discuss historical and potential strategic use of OTAs with the

PEO Panel Closing Remarks

Ground Rules:

Informal Discussion - Not Binding

The contracting officer (KO) is ultimately responsible for communications relating to specific solicitations

Always rely on the solicitation language, not what you hear today

We are not discussing specific solicitations, awards or litigations.

The positions stated are the opinions of the participants and not that of the Army or AMC.

Fundamental Principles driving Government/Industry communication:

Improving requirements, solicitations, evaluations and the overall process

Maintaining the integrity of the procurement process

Ensuring fairness in acquisitions

Promoting competition

Mission accomplishment while protecting the taxpayer

Ground Rules and Principles

Delivering Performance at the Speed of Relevance 2018 National Defense Strategy

[Our] ability to maintain technological, military, and economic superiority is being challenged because [our] adversaries are rapidly modernizing their militaries with an eye toward exploiting U.S. vulnerabilities and negating traditional U.S. advantages.

DoD has not fully adjusted to the pace of this environment, nor has it adjusted to a marketplace that bears no resemblance to that of just a few decades ago. Senator John McCain, May 2017

Section 809 Panel Interim Report

Other Transactions provide the Department of Defense with access to state-of-the-art technology solutions from traditional and non-traditional defense contractors through a multitude of potential teaming arrangements tailored to the particular project and needs of the participants. USD A&S OT Guide

CH-5 UAV

J20 Stealth Fighter

Type 072A Landing Ship

AG600 Seaplane

DF-ZF Hypersonic Vehicle

ZBD-05 Amphibious Infantry Fighting Vehicle

Assistance Vehicles

Grants Minimal Government Involvement

Cooperative Agreements Substantial Government Involvement

Other Transaction Agreements for Research - Technology Investment Agreements

(TIA)

For research when a contract, grant or cooperative agreement is not feasible or appropriate

Relevant Authorities

31 USC 6304, 10 USC

2358, OMB Circulars DoD

GAR

31 USC 6305, 10 USC

2358, OMB Circulars DoD

GAR

10 USC 2371b

Acquisition Vehicles

Other Transaction Agreements for Prototypes and Follow-on Production Leverages non-defense company capabilities to enhance military effectiveness. Improved end state most important objective

Procurement Contracts Codified procedures to competitively acquire supplies and services and fulfill public policy objectives

Relevant Authorities

10 USC 2371b

10 USC 2304, 31 USC

6303, FAR

Other Transaction Agreement (OTA) Types and Authorities

The Federal Acquisition Regulation (FAR) is not applicable to other transactions.

A legally binding contract; similar to commercial sector-contract

Allows greater flexibility and negotiation of most terms and conditions including Intellectual Property, performance reporting and payment terms

Allow agencies to reach innovators in Small Businesses and Non-Traditional Defense Contractors and to create unique processes for soliciting solutions, evaluating, negotiating and monitoring performance

Under the authority of 10 U.S.C. section 2371b, DoD has authority to carry out prototype projects that are:

Directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the Department of Defense, or

For improvement of platforms, systems, components, or materials in use by the armed forces.

Other Transaction Fundamentals

In addition to being directly relevant to military utility…… There is at least one non-traditional defense contractor (NTC) or nonprofit research institution participating to a significant extent in the prototype project or all significant participants in the transaction other than the Federal Government are small businesses or NTCs or at least 1/3 of the total cost of the prototype project is to be paid out of funds provided by sources other than the Federal Government or

Agency’s senior procurement executive justifies exceptional circumstances for an innovative business arrangement, or to expand the defense supply base in a manner that would not be practical or feasible under a contract.

Other Transaction Fundamentals

To establish a Consortium the Government solicits, negotiates and awards an “over-arching” agreement to a non-profit firm which is one of two types:

An existing legal consortium with its members having the technical capabilities to fulfill the scope of the overarching OT such as an established technical trade association A firm responsible for creating a new legal consortium and populating it with the technical entities needed to support the scope of the overarching OT

Consortia membership may be limited to U.S. owned or controlled firms and academic institutions

Basis: National Cooperative Research and Production Act of 1993

Designed to promote innovation, facilitate trade, and strengthen the competitiveness of the United States in world markets

Consortium Based OTAs

Non-traditional Defense Contractor

Not performing and has not performed, for at least one year preceding the issuance of a Request for White Papers (RWP) by the DoD, any contract or subcontract for the DoD that is subject to full coverage under the Cost Accounting Standards.

All small businesses are NDCs. A small business is a business concern as defined under section 3 of the Small Business Act (15 U.S.C. 632). To be considered a small business for the purposes of a RWP, a concern must qualify as a small business under the size standard for the North American Industry Classification System (NAICS) code.

Significant Participation Determined on a project basis and based on the importance of the NDC contribution to the overall execution or outcome of the proposed project. Legislation neither defines “significant” nor prescribes a monetary threshold or value to justify “significant.”

Examples of Significant Participation: supplying a key technology, facility or unique capability, causing a material and quantifiable reduction in the project cost or schedule, causing a measurable increase in the performance of the prototype, value-added analysis not based on percentage of project work or value.

Key Definitions

Joint Certification Program & DOD Directive 5230.25

Certification is required for U.S. contractors who wish to obtain access to unclassified technical data disclosing militarily critical technology with military or space application that is under the control of, or in the possession of the U.S. Department of Defense.

• DLA is the only DOD agency that reviews and certifies the DD Form 2345.

DoD Other Transactions Guide November 2018 version 1.0

Provides advice and lessons learned on the planning, publicizing, soliciting, evaluating, negotiation, award, and administration of OTs, to include all three types of OT agreements:

Research, Prototype, and Production

• Includes references to the controlling statutory and policy provisions for DoD OT authority

• It is not a formal policy document…

References

Potential Government Benefits

Opportunity to engage with non-traditional technology providers.

Opportunity to work with other agencies, industry, and others to acquire new technologies.

Multiple consortia based OTs exist to support Government requirements.

Potential Government Challenges

Efforts not covered by Federal Acquisition Regulation.

OTs require critical thinking, more innovative ways to reach NTCs and more effort than many project teams realize.

Processes and procedures not uniform across all consortia.

Potential Contractor Benefits

Potentially avoids costs associated with FAR compliance.

Opportunity to work with multiple agencies on each project.

Efficiencies created by focusing on defined markets.

Potential Contractor Challenges

Obtaining access to Government program staff.

Learning how to work in the new construct.

Not enough bandwidth to participate in all areas of interest.

Potential Benefits and Challenges

Potential Government Risks

Processes are largely unscripted; achieving success requires more effort than FAR based procurements.

Guidance continues to evolve and older projects may be limited by outdated processes.

Negative perception of OTAs.

Conduct meaningful and relevant training for both Government and Industry.

Review existing agreements for risk areas; address process issues now.

Both Industry and Government must act to ensure integrity, fairness, and credibility of the process.

Government Risk Mitigation Strategies

Potential Contractor Risks

Contractor Risk Mitigation Strategies

Potential Risks and Mitigation Strategies

Stay the course; assume that follow-on production may be under FAR based environment.

Identify and leverage disruptive technologies.

Communicate openly with Government OT practitioners; leverage consortium based OTs where possible.

Existing investment in FAR compliant processes and systems.

OTs target non-traditional companies and facilitate new entrants into established markets.

New processes are disruptive to long established norms.

COMMUNICATE! OTs require meaningful communication between industry/academia and Government. Experience clearly demonstrates that effective communication with requirements holders and solution providers reducing performance risk significantly while reducing acquisition lead times as well.

Leave the Office. Government must find new venues to reach non-traditional defense contractors. Industry and academia must engage as well. Use symposia, consortium members meetings, trade shows, journals, social media, science boards, and your imagination to reach new technology providers.

Experiment. OTs requirement substantially more participation from the Program Office. Feel free to use multi-step selection processes, product demonstrations, product pitches, go / no go criteria, and anything else that makes good business sense. Better yet, ask industry and academia for what they think will work.

Be Mindful. Assume that third parties are monitoring your projects. Consider sensitivity of your project in determining limitations on distribution. Comply with all Operational Security regulations when publicizing an OT project. The International Traffic in Arms Regulation (ITAR) and communications security regulations still apply.

Adjust Your Perception of Success. Obtaining industry and academic participation requires new thinking in how to define success. The terms and conditions of each agreement should maximize benefit to the agreement holders as much as benefit to the Government. If dual use potential exists, don’t limit it unnecessarily.

Recommendations and Best Practices

Begin With Your End State. The most successful project teams develop acquisition strategies by considering the end state first. Where you want to be at the end of a successful prototyping project should inform how you begin. Don’t artificially limit what you can do by accepting approaches that are just good enough.

Q~4: Lowest Price Technically Acceptable (LPTA) vs. Trade-Off 10 July 19, 9-11 A.M. | Mallette Auditorium APG-N

All symposium questions, answers and pending responses will be updated on FedBizOpps by 24 Apr 19.

The remaining FY 19 Quarterly Symposium date is listed to the right and will be advertised on FedBizOpps.

Please send post symposium questions or comments to the S3CoE Mailbox at usarmy.apg.acc.mbx.acc-apg-s3coe@mail.mil

Post Symposium Information

Friendly Reminder APG Army Planning Brief to Industry (APBI) 29 Apr 19-3 May 19 mailto:usarmy.apg.acc.mbx.acc-apg-s3coe@mail.mil