Government Contracting - OTA's - Who Needs The FAR? - Win Federal Contracts

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OTA – Who Needs The FAR
Wednesday,
February 26, 2020

2020 – Fed Gov Con Webinar Series - Washington DC
AGENDA – Where are We Going?
1. What is an OTA Vehicle & When is it Used;
2. Contractor Benefits;
3. Contractor Burdens/Risk and Terms; and
4. Closing Strategic Considerations.
1

OTHER TRANSACTION AGREEMENTS (OTA)
 OTAs are legally binding contracts, referred to as “agreements” to distinguish them
from procurement “contracts” governed by procurement statute (including
Chapter 137 of Title 10 (Procurement Generally) and regulation (FAR, etc.)
 Specific as to DoD, authority for OTAs are set forth in two primary sections of law:
 10 U.S.C. 2371 – granting authority to use OTAs for basic, applied, and advanced
research projects
 10 U.S.C. 2371b – granting authority to use OTAs for prototype projects and
follow-on production
2

DAU
SPECTRUM
3

Benefit: DOD Increases Use of OTA
4

Generally, DoD can use Other Transaction
Authorities for three purposes:
Conduct
Research
Develop
Prototypes
Follow-on
Production of a
Successful
Prototype Project
5

Summary of OTA Contractor Benefits Discussed so Far
Flexibility of
Contracting Terms;
Speed/Shortened
Acquisition Schedule;
Possible Decrease in
Compliance
Requirements;
Growing Market.
6

 The terms of OTAs are streamlined and they are generally exempt
from federal procurement laws and regulations such as the
Competition in Contracting Act (CICA) and the Federal Acquisition
Regulation (FAR).
 Parties are free to negotiate terms like Intellectual Property and
Data Rights.
How are the Benefits of Speed and Flexibility Achieved?
7

Transaction Structure Also Increases Speed
 OTAs can be structured in numerous ways, including:
1. A direct relationship between a single government
agency and a single provider;
2. Joint ventures;
3. Partnerships;
4. Multiple agencies joining together to fund an agreement
encompassing multiple providers; or
5. Through a consortium.
8

Consortium Model: Increases Speed & Decreases Schedule
 The government communicates a problem or goal it is trying to solve or
attain.
 Interested Consortium Members submit white papers for
consideration.
 Members may submit unsolicited technology suggestions and solutions
to solve a defined challenge.
 One goal of the Consortium model is to encourage entities to work
together on R&D projects– members of a consortium often pool
resources in collaboration with DoD.
9

However, the government is required
to compete research and prototype
projects “to the maximum extent
practicable.” (10 U.S.C. 2371b)
Are OTAs Competed?
The Competition in
Contracting Act
(CICA) does not
apply.
10

Consortium Structure Decreases Burden on the Government
 A consortium is an organized group that performs administration and
facilitation functions for its members;
 May facilitate multiparty agreements such that each member is a
co-prime contractor;
 Consortium entities consist of nonprofits, academic institutions, or
contractors; and
 They typically focus on a specific technology area.
11

Recap of OTA Contractor Benefits Discussed so Far
Flexibility of
Contracting Terms;
Speed or Shortened
Acquisition Schedule;
Possible Decrease in
Compliance
Requirements;
Growing Market.
12

Next: What Are the Contractor Burdens or Risks?
Uncertainty in
Negotiated Terms;
Potential Lack of
Protections
Associated with
Unequal Bargaining
Power; and
Uncertainty in
Dispute Resolution
and Other Processes.
13

Do OTA Terms Increase Contractor Burden or Risk?
 Even though OTAs are not governed by the FAR, the government may (and often
does) incorporate both FAR and other non-traditional terms.
 Even though the FAR may be burdensome, Contractors understand the rules.
 OTA terms may be highly customized and Contractors should carefully review and
consider risk-sharing, including terms related to IP and Data Rights, damages,
limitation of liability, termination, changes, notice (including change of control),
disputes, consequential damages, etc.
 This is particularly important because the Scope of Work is typically related to
areas of potential high financial risk such as R&D and Prototype Development.
14

Does the Dispute Process Create Greater Contractor Risk?
 Traditional procurement contracts are subject to the FAR Dispute Clauses and the
Contracts Disputes Act (CDA).
 Although these provisions are mechanical and often burdensome, they provide
predictability of outcome, as the process includes the CO Final Decision and
appeal to the Boards of Contract Appeals or COFC.
 OTAs are not subject to the FAR or the CDA and as a result, the remedy and
process that will apply will be found in the negotiated agreement itself.
15

Dispute Process - Uncertainty
 As a general matter, GAO lacks jurisdiction to review protests of the solicitation or
award because OTAs are not procurement contracts.
 However, GAO established that it does have jurisdiction related to whether the
agency complied with the underlying OTA enabling statute.
 The U.S. Court of Federal Claims has also recently found that it lacks jurisdiction to
hear the merits of a challenge to the award of an OTA.
 This case is ongoing and it was transferred to the Central District of California for
review under the Administrative Procedure Act (“APA”).
 Because OTAs are not procurement contracts, district courts have generally started
review of agency OTA awards under the APA.
16

Contractor Strategic Considerations
Benefits Burdens/Risks
 Growing Market  Dispute Process is Less Certain
 Flexibility in Contract
Terms
 Even though the FAR may be burdensome, Contractors
understand the rules that include “reasonable risk sharing”
 OTA terms may be highly customized and Contractors
should carefully review and consider risk-sharing, including
terms related to IP and data rights, licensing, damages,
limitation of liability, flow-down, termination, changes,
notice (including change of control), disputes,
consequential damages, Cyber Incident Reporting,
indemnity, export, etc.
 Possible Decrease in
Compliance
Requirements
 Speed or Shortened
Acquisition Schedule
17

Contractor Strategic IP Considerations
Closing Contractor Strategic Considerations
18

THANK YOU!
Washington DC
hello@JenniferSchaus.com
www.JenniferSchaus.com
+ 1 – 2 0 2 – 3 6 5 – 0 5 9 8
A. Rose Stern
astern@mcguirewoods.com
202.828.2831

Government Contracting - OTA's - Who Needs The FAR? - Win Federal Contracts

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