Production OT’s – Getting Serious

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    The power of OT’s is being rediscovered. Other Transactions potential to transform the acquisition system is being demonstrated. Yet, it is not uncommon to run into folks that think OT’s are used only to form consortia or aimed only at “non-traditional” contractors. Others think they are just a trendy, niche authority that will never have relevance as a substantial or serious contributor to deploying operational systems important to the missions of DOD or other agencies.

    Negative opinions about OTs ignore certain facts. All of our nation’s national security space launches take place on launch vehicles whose development was contracted using Other Transactions Authority. The F-35, DOD’s largest acquisition program, started as the Advanced Short Take-off, Vertical Landing (ASTOVL) program utilizing OT contracting. Its technology probably would have benefitted from maturing as an OT prototype project longer rather than being rushed into a FAR-based major acquisition system! Global Hawk, the autonomous long range, high altitude reconnaissance vehicle began as an OT. Obviously all these programs transitioned into production and provide key military capabilities. Other OT projects transitioned to production including major acquisition programs. The transition path was sometimes smooth, but often not.

    The lessons of the past, partially illustrated by the examples above, have largely been forgotten. In the early 2000’s a couple versions of OT production authority were successively enacted in law. Both were arcane and ponderous and never utilized. In the 2016 National Defense Authorization Act signed into law in November 2015 subsection (f) of 10 U.S.C. 2371b was enacted. It provides a simple, effective way to transition a successful OT prototype project into production. It was essentially ignored by the senior procurement establishment. The non-binding Guide for OT Prototype Projects issued by the OSD Director, Procurement and Acquisition Policy in January 2017 (more than a year after very important changes in the OT law) included only a single sentence mentioning follow on production without encouraging its use.

    Fast forward to today. Almost two years after enactment of the new follow-on production authority the Defense Innovation Unit Experimental (DIUx) executed its first production OT agreement. Although DIUx primarily deals with non-traditional contractors its first large production OT agreement (five years, $750 million) was with cyber security firm Tanium that has done significant DOD business in the past. The actual production contract has been transitioned to the Army. DIUx has other OT production efforts under contract or in the works. Now one of the military services is publicizing its use of an OT production effort.

     Significantly the Army is on a path to field up to 5,700 squad multi-purpose equipment transport robotic vehicles (“robotic mules”) in a winner-takes-all OT prototype project competition that may wrap up as early as 2019. After more than a decade of experimenting with robotic mules designed to take the load off overburdened foot soldiers, the service is on an accelerated path to award a contract that will take about 15 months total using OT authority.

     An Army official asserted this is significantly faster than it has been able to accomplish previous efforts; competition through an OT, can go to production and turn it into a program of record. The Army wants to buy anywhere from 2,700 to 5,700 robotic mules for brigade combat teams depending on affordability and budgets.

    The Army is in the process of selecting a contractor after bringing in seven vendors with eight different vehicles in 2017 to perform operational tests. Currently Applied Research Associates-Polaris; General Dynamics Land Systems; Howe and Howe Technologies (two versions) are still in the competition. Twenty prototypes of each will go to Fort Drum, New York, and Fort Campbell, Kentucky for a year of testing and evaluation. A milestone C decision in the formal acquisition process is expected by mid-2019. An Army official said a typical program of this kind would take upwards of 10 years but the Army wants to go faster. The Army needs to go faster.

    The basic idea of a robotic mule goes back to the Future Combat System program of the early 2000’s. A key change since then is that the transition mechanism provided in 10 USC 2371b (f), added by the 2016 NDAA, provides a greatly simplified way of transitioning the contracting. The follow-on production effort after a successful prototype OT can be executed as a production OT or awarded non-competitively as a procurement contract.

    More OT’s for production will be forthcoming. Major defense contractors like General Dynamics will be players. OT’s are serious business and the future of DOD acquisition can substantially benefit by regular use of these tools and the lessons already learned.

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