Two professionals outside a courtroom, discussing what is an OTA in government contracting

What Is an OTA in Government Contracting?

Federal Government Procurement Process, Government Contracting, Government Contract Work, Research and Development, OTA, Government IT Solutions, Federal Government Contracts

If you’ve engaged in any kind of government contracting on a federal, state, or even local level, you may have heard about an OTA, or Other Transaction Authority. But what exactly is an OTA in government contracting? 

An OTA can be especially useful for non-traditional defense contractors, once you understand how to use it. But knowing what an OTA contract is under the Code of Federal Regulations, the relevant guidelines and purposes for using an OTA, and how contractors can benefit from OTAs can be a complicated matter for those who need it most.

As an organization that frequently contracts with government agencies, we’ve broken down all this and more so anyone can understand OTAs in government contracting. In fact, we are pleased to announce that we have recently joined the Information Warfare Research Project (IWRP); Sensors, Communication, and Electronics Consortium (SCEC); System of Systems Security Consortium (SOSSEC); and Naval Surface Technology & Innovation Consortium (NSTIC). These OTAs will provide us with additional mechanisms by which to submit our ideas and services to the government. Learn more about the relationship we and other contractors have with OTAs below.

Understanding OTAs 

What Is FAR?

The Federal Acquisition Regulation (or FAR) is a set of clauses within the Code of Federal Regulations that makes up most of the code. FAR establishes the substantial and relatively complex rules for contracting within the Federal Government, including (but not limited to) provisions around changing the scope of work, making payments, conduction inspection, testing goods, and acceptance of goods. Its beginnings can be traced back to the Armed Services Procurement Regulations, which were established in 1947. All federal government agencies and government contractors who win contracts are required to follow the rules and policies set within FAR. 

FAR can be amended when the three government agencies governed by it—the Department of Defense (DoD), NASA, and the General Services Administration (GSA)—and the FAR Council propose to do so under the “notice and comment” guidelines established by the Administrative Procedure Act, which was also established in 1947. Most relevantly, FAR was amended in March of 2020, which aligned the code with changes made by the Small Business Administration. This set a policy for partial set-asides of orders for small businesses under multiple-award contracts government-wide.

However, sometimes the Department of Defense will need access to research and development projects or prototypes from commercial services, along with more flexibility than the traditional FAR acquisition model allows—even if there is an amendment. This is where OTA steps in.

What Is an OTA in Government Contracting?

Technology professionals meeting about using an OTA in government contractingAn Other Transaction Authority (OTA) is a vehicle that federal agencies, specifically the DoD, can use to expedite and simplify access to important technology that they need faster than typical FAR protocol allows. OTAs were also created to give the DoD the flexibility to adapt to and incorporate business practices that reflect the current commercial industry standards and best practices that those standards change. In 2016, the National Defense Authorization Act (NDAA) gave the DoD the authority to award OTAs for research, prototype, and production purposes.

There is actually no such thing as an OTA contract because it isn’t a contract, grant, cooperative agreement, or formal selection process at all. Rather, it is an authority that allows government agencies to enter into transactions that must fall outside of FAR, usually due to the speed required for these critical projects. 

As they are not based in FAR, OTAs do not follow the standard format or guidelines expected of contracts that fall within FAR. They also often do not include the many terms and conditions that FAR contracts or Department of Defense Grant and Agreement Regulations (DoDGARs) have. This flexibility makes them that much more appealing for non-traditional contractors to do work for the government.

OTA Guidelines

While there are fewer guidelines when using an OTA, they do still have some restrictions.

Typically, the awardee must be a non-traditional defense contractor, which is a pretty broad start: that includes any commercial or academic institution. On top of that, a non-traditional contractor is defined as an entity not currently performing, and having not performed for at least one year prior to an OTA solicitation, either as: 

  1. a contract or subcontract that was subject to full coverage under the Cost Accounting Standards (CAS), or
  2. any other contract greater than $700,000, under which the contractor is required to submit pricing data.

Occasionally, the awardees can be traditional defense contractors, but only if a non-traditional contractor is also considered as participating to a “significant” extent. Significant participation refers to any of the following:

  • Supplying a new key technology or necessary product
  • Fulfilling a significant amount of the effort
  • Causing a material reduction in cost and/or schedule

However, an agency could ask to bypass these regulations in exceptional circumstances, which is permitted on occasion.

3 Purposes of an OTA in Government Contracting

There are three purposes that OTA may be applied for: research, prototype, and production.

1. Research Purpose

Research purpose allows for basic, applied, and advanced research projects. These are intended to incite dual-use research and development, without burdening companies with typical government regulatory overhead. This allows the individual companies to remain competitive, even in the non-defense sector. 

More traditional defense contractors may pursue research OTAs if they are interested in working closely with a non-traditional contractor, adopting commercial practices, or diversifying out into the commercial sector. 

2. Prototype Purpose

Prototype purpose allows for projects relevant to weapons systems to be acquired or developed for the DoD by non-traditional defense contractors. A prototype purpose must do one of three things:

  • Enhance systems, components, or other materials the DoD proposes to develop
  • Strengthen the effectiveness of military personnels’ missions
  • Improve the armed forces’ systems, components, materials, or platforms

The final result of the prototype may be a physical or virtual model, depending on what exactly it is that’s being developed. Once produced, the government will use it to evaluate the military utility or functionality as a technology, concept, system, process, or end item.

3. Production Purpose

Production purpose allows non-competitive follow-ups on a prototype OTA that was already awarded and completed in full. If the agency anticipates a need for a production OTA, there must be advanced consideration and notice given to those that were awarded a prototype OTA.


Sentient Digital, Inc. is excited to announce that we have recently joined the Information Warfare Research Project (IWRP); Sensors, Communication, and Electronics Consortium (SCEC); and the System of Systems Security Consortium (SOSSEC); and Naval Surface Technology & Innovation Consortium (NSTIC). These organizations exist to help manage multiple research and development OTAs, allowing non-traditional government contractors to overcome any barriers that may prevent them from being able to enter the DoD marketplace.

The SOSSEC is currently comprised of more than 800 different members. They were awarded their first OTA in 2009 and have completed more than 300 since then, with over $300 million dollars in projects in 2020 alone. Joining the SOSSEC and SCEC is a great opportunity, and will further expand SDi’s contracting channels for the support of research and prototype projects and programs. 

These opportunities provide SDi with another important avenue to gain experience and build relationships with clients. In particular, the OTA route will be a good fit for the artificial intelligence and machine learning whitepapers and ideas that Gene Locklear, SDi’s AI research scientist, has created. 

Benefits of an OTA in Government Contracting

As you may have already gathered, there are many benefits of OTAs. First and foremost is the lack of the lengthy and complicated FAR-based acquisition processes that typical DoD contractors must abide by. However, there are other benefits of attracting new technology firms with OTAs, including: 

  • Allowing the government to leverage the private sector’s R&D investments
  • Invoking best business practices
  • Cutting back on the cost of research and development projects
  • Being able to focus on the final technical results, without worrying about the process and cost leading to those results
  • Reducing red tape
  • Creating a unique marriage between the products and ideas from commercial and non-traditional contractors with government needs

The Future of OTAs

Check out this infographic or keep reading our post for data on OTAs in government contracting.

OTAs took off in 2015, and studies indicate that though they are still a relatively small percentage of the overall DoD obligations, the government is becoming more enthusiastic by the year. OTA obligations skyrocketed from $4.4 billion in 2018 to $7.7 billion in 2019, a 75% increase, according to a study on defense acquisition trends that was released in October of 2020.

Right now, the Army is the primary user of OTAs, accounting for 67% of OTA obligations. Far behind is the Air Force (21%), DARPA (6%), and the Navy/Marine Corps (2%). Though these numbers may seem low overall, this is still an increase. From 2018 to 2019, the Army OTA obligations have increased by 61% (from $3.07 billion to $4.95 billion), the Air Force by 190% (from $540 million to $1.56 billion), and the Navy/Marine Corps by a whopping 431% (from $30 million to $170 million), according to the report. 

The Army had a head start, using OTAs before the 2016 NDAA was passed, which may account for their much higher usage rate. However, based on these numbers, the other departments are obviously working to catch up.

While the current growth rate may not be sustainable, OTAs should continue to be used more and more in the coming years. This could mean that they will face added scrutiny as they become more popular. But as long as the DoD isn’t using the authority excessively or inappropriately, it seems that the future is bright for OTAs and non-traditional contractors stepping into the government contracting fray.

Making OTAs Work for You

OTAs are a great opportunity for non-traditional contractors of all kinds, and SDi is here to help. With our new memberships to IWRP, SCEC, SOSSEC, and NSTIC, we are looking for avenues to pursue research and prototype projects and programs.

Whether you are a fellow contractor looking for an organization to partner with or a government agency seeking an innovative contractor to work on your latest initiative, contact us today about how we can work together.