Language and it’s meaning is important. One issue that contributes to a lack of understanding Other Transactions (OTs) relates to misconstruing statutory language. The Federal Acquisition Regulation (FAR) uses similar or the same words found in the OT authorities, but their statutory histories are quite different, and they often do not mean the same thing. Therefore, I think it is important to review the statutory history when I teach. I know, some DOD lawyers have seriously mis-served their clients by reaching conclusions about statutory meaning and intent without a deep dive into the origins of statutory language and changes over time. The statutes have their own meaning and legislative history! They are not limited or defined by terms used in various regulations familiar to DOD acquisition professionals.
Some DOD acquisition professionals and lawyers have intentionally or unintentionally limited the scope of OT authority by a narrow read of the statutes. The original OT statute was enacted in the wake of the Packard Commission (President’s Blue Ribbon Commission on Defense Management). The Packard Commission found DOD’s acquisition system to be overly regulated resulting in many defense systems that “cost too much and take too long.” OTs were freed from most regulations. The OT statutes are remedial statutes! According to normal rules of statutory construction, remedial statutes are to be liberally or broadly construed. Decades have gone by since the Packard Commission’s findings. Despite numerous attempts to reform the traditional acquisition system members of a recent commission (section 809 Panel) testified to Congress that the acquisition system has gotten worse not better. The need for OTs has not diminished, but increased. They continue to be mis-understood; handicapping the potential to be an alternative to the “cost too much, takes too long” system.
Much lore has arisen around OTs. First, they are not just “another tool in the toolbox.” They are not a niche acquisition instrument. They CAN be used for acquisition, for financial assistance, for technology transfer, and for entirely different relationships and purposes. They CAN be the core of a complete alternative to the acquisition system and much more. Considering OTs to be merely acquisition instruments or just another “tool in the toolkit” limits thinking and understanding their true potential.
Beyond the big picture issues, individual words and phrases are often not understood. The current version of the science and technology OT statute (10 U.S.C. 2371) includes the phrase “basic, applied and advanced research projects.” One trap is to assume that these words mean the same thing as “basic research”, “applied research” and “advanced research” in DOD’s financial management manual. In the original version of the statute, which was DARPA specific, the operative language was simply “advanced research projects.” The meaning was also simple, “the kind of things DARPA does.” This included research of the most fundamental or basic kind up to demonstrations of major capabilities. Projects included initiation of the Saturn space launch vehicle; purchase of a thousand commercially available rifles supporting a year-long test program in combat; creation of a system to detect nuclear tests; and, creation of the internet (originally ARPANET) for example. When section 2371 was applied DOD-wide there was some concern that “advanced research projects” would not be understood to include basic and applied research as practiced by DARPA. The language was changed but not the intent. The 2018 DOD Other Transactions Guide points out that selection of funding instrument is independent of the selection of the appropriate funding type. The language in section 2371 is not intended to limit section 2371 OTs only to projects funded by budget activities (6.1 to 6.4) described in the financial management manual.
Words in 10 U.S.C. 2371b that seem to raise questions include “maximum extent practicable” and “competitive procedures.” The DOD OT Guide provides some help. In the discussion of “Publicizing for solutions” it suggests targeting relevant technology providers not necessarily the whole world; “Soliciting for solutions” mentions a number of techniques from a BAA-like approach to hack-a-thons, prize competitions, shark tank presentations and so forth, saying these “are just a few examples of possible solicitation methods…”; “Evaluating solutions” exhorts fairness and says evaluation should be consistent “with industry norms…”
The statute itself does not say what “competitive procedures” are nor what “maximum extent practicable” means; nor does the OT Guide glossary. However, the “myths” section of the Guide points out agencies are not required to comply with the Competition in Contracting Act (CICA) or “follow the competition rules of the FAR.” The statute and Guide “allow the agency to determine what the competition will look like and how it will be structured.” For instance, Special Operations Command has used its partnership intermediary (SOFWERX) to conduct initial outreach as part of “competitive procedures.” When issuing an RFI (request for information) document that the RFI is considered a “competitive procedure” for purposes of 2371b (or might lead to award of a 2371 or 2373 agreement).
The Guide does not contain a discussion of non-competitive awards or “maximum extent practicable.” This is presumably because the Guide requires all OT solicitations and agreements to anticipate follow on production; and, a seamless non-competitive follow on effort requires competition at the prototype stage. This is a weakness in the Guide since some prototype projects will not anticipate follow on production, but are meant just as a demonstration of the state of technology or proof of principle. For a non-competitive prototype OT at least the exceptions to competition allowed under CICA could be applied. This would include unsolicited proposals. In addition to adopting exceptions to full and open competition in CICA a rule of common sense should apply. “Practicable” is something less than an absolute requirement. There is wide-flexibility in applying both “maximum extent practicable” and “competitive procedures”.
Some OT practitioners have read “directly relevant” in 10 U.S.C. 2371b as words of limitation. Exactly the opposite is true the words expand the scope of “enhancing the mission effectiveness of military personnel…” in section 2371b(a). This language dates to the original prototype authority (section 845, Public Law 103-160). The original authority applied to “weapons or weapon systems…” Thus, things directly relevant to weapons or weapons systems did not limit the scope of weapons and weapons systems. It might include things like training, logistics, test equipment, system upgrades, or business or maintenance processes supporting such systems. Things directly relevant to enhancing the effectiveness of military personnel might include things that improve the health and welfare not only of military personnel but also their families. A deploying military member that does not need to worry about the condition of family housing, his family’s welfare, or access to health care is likely to be more effective than one who has worries. Prototype projects to improve business and other processes applicable to military families fall within the orbit of directly relevant.
The discussion above is a cautionary tale. It suggests the need to be wary of lore surrounding OTs that is often propagated by people who know less than they think. Understanding what OT statutes requires a certain amount of effort and openness.
written by Richard L. Dunn
relevant article: The Virtue of Unlearning