UNCLASSIFIED Joint Program Executive Office for Chemical ... · that would remove barriers to DOD using commercial technology provide greater access to commercial technology. Other

Chemical and Biological Defense

Joanne Abbott JD Esq June 2018

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Joint Program Executive Office for

Distribution Statement A: Approved for public release; distribution is unlimited.

Other Transaction Authority

Industry Training

Agenda

• Why Other Transaction Authority?

–Change

–Congress and DoD adapting

• DOD’s Other Transaction Authority

• How OTA acquisitions benefitindustry

2018 June_OTA for Industry _Joanne Abbott

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Distribution Statement A: Approved for public release; distribution is unlimited. 2

Why OTA?


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• Private investment in R&D has outpaced DOD’sover the past 3 decades.

• Innovation being driven by the commercial sector

WHY OTA?

GAO Report July 2017

U.S. Research & Development Funding

1987 2013

DOD $ 69 B $ 75 B

Commercial Sector $114 B $341 B


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WHY OTA?

Respond to a DOD request

• 25 FTE

• 12 Months

• $ Millions

Respond to similar commercial product

• 3 part time people

• 2 Months

• $ Thousands

GAO Report July 2017

Nontraditional defense companies prefer more cost

effective competition and quicker selection decisions


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Why OTA?

Public perception is that business arrangements with thefederal government cannot keep pace with the innovativetechnologies coming out of “Silicon Valley”

Reasons most cited are: a culture that is risk averse and adversarial unyielding statutory and regulatory demands, and a workforce under siege (undertrained & overworked)

In response, DOD provided Congress with recommendationsthat would remove barriers to DOD using commercialtechnology provide greater access to commercial technology

Other Transaction Authority and Commercial Sources Openings were recommendations later enacted by Congress

From OSD - OTA Workshop Nov 201662018 June_OTA for Industry _Joanne Abbott

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Why OTA? The 1958 Space Race

To counter the Soviet Union’s technical success in “outer” space Congress created NASA to:

• research into the problems of flight within and outside theEarth's atmosphere, and for other purposes.

• and authorized NASA “to enter into contracts, leases,cooperative agreements, or other transactions as may benecessary in the conduct of its work and on such terms as itmay deem appropriate, with [just about any entity or person]”

• The NASA Chief Counsel first used the term “Other TransactionAuthority Agreement”

Since 1958 Congress continues to grant OTA to federal agencies


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DOD’s OTA for Prototypes & Follow-on Production


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DOD’s Legal Instruments

ASSISTANCEto benefit a public purpose

ACQUISITIONfor direct benefit of an agency

Grants CooperativeAgreements

Other Transaction Agreementsfor Research

(TIA)

Other Transaction Agreements

for Prototypes

Procurement .Contracts

31 USC 6304 31 USC 630510 USC 2358, 6 USC 187 & 188OMB Circulars, DOD GAR

10 USC 23716 USC 391

10 USC 2371b Sec 815P.L. 114-926 USC 391

10 USC 230431 USC 6303FAR

Minimal Government involvement

Substantial Government involvement

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

Leverages non defense company capabilities to enhance military effectiveness. Improved end state most important objective

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


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OT Authority “2371b” for Prototypes & Follow-on Production

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

directly relevant to enhancing the mission effectiveness ofmilitary personnel and the supporting platforms, systems,components, or materials proposed to be acquired ordeveloped by the Department of Defense, or toimprovement of platforms, systems, components, ormaterials in use by the armed forces.

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OT Authority for DOD


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DOD’s Other Transaction AuthorityPrototypes can generally be described as…….

OSD’s Other Transaction Authority Guide for Prototype Projects, January 2017

• Preliminary pilot, test, evaluation, demonstration, or agile

development activity used to evaluate the technical or

manufacturing feasibility or military utility of a particular

technology, process, concept, end item, effect, or feature.

• May include systems, subsystems, components, materials,

methodology, technology, or processes.

• May involve: a proof of concept; a pilot; a novel application of

commercial technologies for defense purposes; a creation,

design, development, demonstration of technical or operational

utility; or combinations of the foregoing, related to a prototype.

• The quantity should generally be limited to that needed to

prove technical or manufacturing feasibility or evaluate military

utility.Note: OTA for Follow-on Production allows additional quantities



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DOD’s Other Transaction AuthorityPrototypes can generally be described as…….


• Preliminary pilot, test, evaluation, demonstration, or agile

development activity used to evaluate the technical or

manufacturing feasibility or military utility of a particular

technology, process, concept, end item, effect, or feature.

• May include systems, subsystems, components, materials,

methodology, technology, or processes.

• May involve: a proof of concept; a pilot; a novel application of

commercial technologies for defense purposes; a creation,

design, development, demonstration of technical or operational

utility; or combinations of the foregoing, related to a prototype.

• The quantity should generally be limited to that needed to

prove technical or manufacturing feasibility or evaluate military

utility. Note: OTA for Follow-on Production allows additional quantities


THESE ARE ONLY EXAMPLES

FROM THE OTA GUIDE.

THESE ARE NOT STATUTORY

REQUIREMENTS


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Review - Project must first meet this:

Under the authority of 10 U.S.C. section 2371b, the Department of Defense 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 to improvement of platforms, systems, components, or materials in use by the armed forces.

AND THEN…

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Each 2371b Prototype Project SHALL meet one of the following conditions: A. “There is at least one nontraditional defense contractor or

nonprofit research institution participating to a significantextent in the prototype project

B. OR all significant participants in the transaction other thanthe Federal Government are small businesses or NTDCs

C. OR at least 1/3 of the total cost of the prototype project isto be paid out of funds provided by sources other than theFederal Government

D. OR Agency’s senior procurement executive justifiesexceptional circumstances for an innovative businessarrangement, or to expand the defense supply base in amanner that would not be practical or feasible under acontract.”

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Each 2371b Prototype Project SHALL meet one of the following conditions: A. “There is at least one nontraditional defense contractor

or nonprofit research institution participating to asignificant extent in the prototype project




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• A Nontraditional Defense Contractor is

– An entity not currently performing, and has notperformed for at least the one-year periodpreceding the solicitation of sources by DOD forthe procurement or transaction, any contract orsubcontract for DOD that is subject to fullcoverage under the cost accounting standards

• Nonprofit research institutions

– These were added in the 2018 NDAA

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“Examples of what might be considered a significant contribution include

• supplying new key technology or products,

• accomplishing a significant amount of the effort,• or in some other way causing a material

reduction in the cost or schedule or an increasein performance.”


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Participating to a significant extent



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“Examples of what might be considered a

significant contribution include

• supplying new key technology or products,

• accomplishing a significant amount of the effort,• or in some other way causing a material

reduction in the cost or schedule or an increase in performance.”


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Participating to a significant extent


THESE ARE ONLY EXAMPLES

FROM THE OTA GUIDE.

THESE ARE NOT STATUTORY

REQUIREMENTS


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C. OR at least 1/3 of the total cost of the prototype project isto be paid out of funds provided by sources other than theFederal Government OR Agency’s senior procurementexecutive justifies exceptional circumstances for aninnovative business arrangement, or to expand the defensesupply base in a manner that would not be practical orfeasible under a contract.”

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“Govt should not generally mandate cost-sharing requirements for defense unique items so use of OTA that invokes cost-sharing requirements should typically be limited to those situations where there are commercial or other benefits to the awardee.” OSD GUIDE to OTA for Prototypes, January 2017

• The 1/3 cost share must be non Federal dollars anddoes NOT include:

• costs incurred prior to award of the OTA (with someexceptions)

• cost of government-funded research

• cost of a company’s IR&D performed prior to the OTA

• indirect costs that are not allocable to the OTA

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• Typically, the 1/3 cost share consists of:

– labor, material, equipment, facilities cost, andallocable indirect costs

• The cost share value of using fullydepreciated assets in the prototype projectshould be limited to a reasonable usagecharge

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A follow-on production FAR contract or another OTA may be awarded to the participants in the prototype OTA without the use of competitive procedures if• competitive procedures were used for the selection

of parties for participation in the prototype OTAand

• the participants successfully completed theprototype project.

Follow-on Production



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Benefits of OTA Agreements


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Suppliers


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Benefits of OTA

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SUPPLIERS

• FAR contracts require suppliers to:• Certify business info and have ethical standards• Demonstrate past performance• Use performance tracking and reporting systems• Be registered into DOD’s databases/systems• Plus much more

• An OTA Agreement holder must:• Be able a legal entity• Meet statutory requirements


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Soliciting & Communicating


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• Solicitations for FAR contracts typically use govtdefined the specs, a PWS, or a SOW and requirecompliant proposals

• FBO.gov publication is mandatory

• Communication between the government andindustry controlled by regulation

• OTA solicitations typically use Statement ofObjectives (SOO) to encourage innovation

• Competition is practicable as determined by AO

• Collaboration and communication encouraged

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SOLICITING & COMMUNICATING

Benefits of OTA


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Benefits of OTA

SOLICITING & COMMUNICATING

OTA solicitations typically request a White Paper, an Enhanced White Papers or a Proposal

• White Papers are short (five pages or less) that

– explains a technology or solution to a problem specified bythe govt and describes the entity's technical capability, legaland financial status

– Identifies any intellectual property and associated rights

– May or may not include cost info; ROM’s are common

• Proposals are longer and include cost or price information

– Often requested after submittal of a successful white paper

• Enhanced White Papers include cost information

ATI will elaborate on these next


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Benefits of OTA

FAR Contract

Communication between government and contractors is categorized, structured and sometimes restricted• Exchanges

• Meaningful discussions

• Clarifications

• Debriefings

• Discussions

• Competitive range and Awardnotices

OTA Agreement

Collaboration is encouraged • to engage nontraditional defense

contractors

• to leverage and integrateinnovation and new technologyinto DOD

• to define requirements and learnof commercial solutions

• to solve problems and duringproject execution

Communication is subject to the Procurement Integrity Act

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COMMUNICATING


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Benefits of OTA

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COMMUNICATING

Good communication skills are essential for effective

collaboration.a

Collaboration is essential for the best outcome from an OTA

Agreement. 2018 June_OTA for Industry _Joanne Abbott

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Benefits of OTA

Competition in Contracting Act

Contract Disputes Act

Examination of Records

Indemnification

Prohibition against doingbusiness with certain offerors

Prohibitions on personsconvicted of defense contractrelated felonies

Protection from reprisal fordisclosure of certain information

Anti-Kickback

Labor (Walsh-Healey Act)

Drug-Free Workplace Act

Buy American Act

Bayh-Dole Act

Technical data provisionapplication to DoD

Truth in Negotiations Act

Cost Accounting Standards

Cost Principles

Statutes Inapplicable to OTAs

Congressional Research Service, OTA, July 15, 2011, L. Elaine Halchin


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Benefits of OTA

FAR Contract

• Most T&C are required bythe FAR

• Depending on contract,cost and technicalreporting may beburdensome

• Deviations and waiversare allowed but difficultto attain

• Ability to negotiate dataand IP rights is limited

OTA Agreement

• Many T&C protecting theparties are included in theconsortium agreement

• Wide latitude for theparties to negotiate termsand conditions that suit aspecific project including

– Reporting

– Incentives

– Data and IP rights

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TERMS & CONDITIONS


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Suppliers

Requirements

Soliciting

Evaluating

Negotiating

Awarding

Performing

FAR Model vs OTA Model

FAR OTA

PRODUCT ORENTED WITH

COLLABORATIVERELATIONSHIP


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Suppliers

Requirements

Soliciting

Evaluating

Negotiating

Awarding

Performing

FAR Model vs OTA Model

FAR OTA

PROCESS ORIENTEDWITH

“PARENT-CHILD”RELATIONSHIP

PRODUCT ORIENTED WITH

COLLABORATIVERELATIONSHIP


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Unlike the FAR, there is not one

playbook for OTA Agreements


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Thank you for your participation


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Documents

UNCLASSIFIED Joint Program Executive Office for Chemical ... · that would remove barriers to DOD using commercial technology provide greater access to commercial technology. Other