Understanding Section 2373 – Rapid Acquisition for Experimentation, Research and Testing

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Organizations interested in innovation and flexible contracting should obtain delegations of authority for section 2373 of title 10, U.S. Code (purchases for experimental purposes) which while technically not using the language of other transactions is closely related in spirit and purpose to OTs, including the fact that the Federal Acquisition Regulation (FAR) does not apply.

Section 2373 reenacted and updated an earlier version of the statute upon recommendations of the Section 800 (of the National Defense Authorization Act of 1991) Panel. It appears from the Panel’s report that it was aware of niche use of the authority but probably not that it was the primary way the Air Corps once acquired experimental and service test aircraft. In 2016 Congress endorsed wide use of the authority by greatly expanding the domains to which the statute applies. The DOD has not provided the leadership or work force education to take advantage of the tool Congress has provided.

Text of the statute. Our discussion begins with the text of the statute which being relatively brief is quoted in full:

The Secretary of Defense and the Secretaries of the military departments may each buy ordnance, signal, chemical activity, transportation, energy, medical, space-flight, telecommunications, and aeronautical supplies, including parts and accessories, and designs thereof, that the Secretary of Defense or the Secretary concerned considers necessary for experimental or test purposes in the development of the best supplies that are needed for the national defense.

Purchases under this section may be made inside or outside the United States and by contract or otherwise. Chapter 137 of this title applies only when such purchases are made in quantities greater than necessary for experimentation, technical evaluation, assessment of operational utility, or safety or to provide a residual operational capability.

Exercise of authority. The authority of section 2373 is vested in the Secretary of Defense and the Service Secretaries. As with other authorities this authority may be delegated. The Secretary of Defense has delegated this authority to the Defense Advanced Research Projects Agency (DARPA), for example. The authority has been selectively delegated within the Air Force. However, the authority is not in general use and organizations desiring to use the authority will need to request delegations. Implementing regulations are not required or desirable. The statute speaks for itself.

The domains to which the authority applies are broad but not unlimited. They are “ordnance, signal, chemical activity, transportation, energy, space-flight, and aeronautical supplies, including parts, accessories and designs thereof…” Note the use of the term domain (a field of action or thought) which is used advisedly consistent with both the history and intent of the statute. What is authorized are purchases within the domain of ordnance not just ordnance narrowly defined but those things associated with ordnance. Signals encompasses all things associated with signals and communication. Some technologies not expressly mentioned are none the less also authorized. In discussions leading to the expansion of the statute’s language it was not thought necessary for example to include software or robotics as those technologies were considered inherent in the domains mentioned. Going back to the original statute it is clear that supplies can mean a full up system platform such as an aircraft. The statute also addresses components, sub-systems, parts and materials, and, designs.

Purpose, procedures, quantities. A proper understanding of the statute’s purposes, its exemption from “business as usual” contracting, and the quantities of materials that may be acquired using the authority demonstrate that it is not a niche authority but properly understood and used can become a key element to innovation in defense research and acquisition. In addition to pure research and experimentation the statute permits tests items to be retained and used for operational purposes. Moreover, testing done under the statute may justifying a program’s entry into the traditional major acquisition system beyond Milestone A.

(1) Purpose. In sub-section (a) the purpose as stated as “experimental and test purposes”. This is related to “best supplies” which as stated above is not limited to items of supply but includes national defense systems as well as component and lower level technologies and products. Sub-section (b) further elucidates the purpose as “experimentation, technical evaluation, assessment of operational utility, or safety or to provide a residual operational capability.”

(2) FAR not applicable. Chapter 137 of tile 10, Procurement Generally, incorporates the Armed Services Procurement Act as amended, which is the fundamental basis of the FAR and defense supplement to FAR. The Act and its implementing regulations, FAR and DFARS, do not apply to section 2373 purchases as long as those purchases are limited to quantities to be discussed below. Purchases may be made by “contract or otherwise.” The contract can be essentially a procurement contract to which the law and regulations do not apply. Thus, it may look like a procurement contract but be awarded with only limited or no competition. It may leave out certain provisions that would otherwise go in a procurement contract. Since it is not required to comply with the procurement laws arguably there is no basis for a protest under Government Accountability Office (GAO) procedures. Then there is “or otherwise”. The purchase may take place on commercial or foreign terms with no reference to FAR procedures or contract clauses. Other arrangements (e.g. barter, bailment) may be utilized. Purchases may be outside the United States. This could include purchase of adversary weapons from third parties to test their capabilities and understand what capabilities future U.S. systems need to counter them.

(3) Quantities. What are quantities necessary for “experimentation, technical evaluation, assessment of operational utility, or safety or to provide a residual operational capability”? An accurate but not very satisfying answer is that it depends. A few examples may aid the inquiry. (a) Air Corps practice was to purchase experimental aircraft in small quantities, only one or perhaps two or three. Service test aircraft were often purchased in quantities of thirteen. Historical examples include the XB-15, XB-17 and service test Y1B-17. (b) An Office of Secretary of Defense and ARPA project in the early 1960’s purchased a thousand commercially available AR-15 sub-caliber rifles. They equipped a U.S. Ranger battalion and an ARVN battalion in Viet Nam. They were used in actual combat operations for a year. The AR-15 test program resulted in the Army initiating development of the M-16 which became its standard infantry weapon. (c) During the first Gulf War (1990 – 1991) DARPA sent 74 sets of ceramic applique armor to the desert. That was enough to equip all the deployed Marine light armored vehicles with the added protection. The total U.S.M.C. fleet of LAVs was in excess of 700 vehicles. (d) Seven Global Hawks were built during its Advanced Concept Technology Demonstration (ACTD) phase. More might have been acquired as ACTD assets, but the program transitioned out of the ACTD phase earlier than originally anticipated. The demonstration air vehicles were put into active service over Afghanistan.

Conclusions. Section 2373 is a potentially powerful tool for fielding and testing new capabilities within the scope of its various domains. The example of the B-17 shows it is not a niche authority. Section 2373 is underutilized today. Many organizations that might make good use of it have not requested delegations of authority. Since FAR and DFARS did not apply section 2373 projects can be streamlined avoiding non value-added processes. Section 2373 authority can be combined with other authorities such as science and technology OTs (section 2371) or incentive prize competitions (section 2374a) to rapidly transition emerging technologies into fielded systems for realistic testing and evaluation. Section 2373’s power to rapidly and effectively test new capabilities awaits only education and leadership will.

written by Richard L. Dunn


6 Responses

  1. BRW

    You state in the conclusions that Section 2373 can be stacked with this other science and technology OTs. 2371b lays out the requirement that non-traditional contractors must participate. Can it be inferred that 2373 does not require the non-traditional contractor requirements?

  2. admin

    First, with respect to section 2373 the entire statute is quoted in full in the article. It says nothing about the characteristics of the party or parties that enter into a 2373 arrangement with the government. Traditional, non-traditional, and foreign entities are all fair game. Second, the article (1) does not suggest stacking 2373 and 2371b, and (2) 2371b does not have an absolute tilt toward non-traditional companies. Traditional contractors may be awarded 2371b prototype projects provided they cost-share or receive approval from the senior procurement executive concerned. Note, section 2374a specifically states it may be used in conjunction with other authorities. Additionally, it may well make sense to structure an arrangement where initial science and technology is developed under the authority of section 2371 and then seamlessly transitioned pursuant to a second phase to the demonstration of an operational capability under 2373. One final comment on who or what type entity might receive an OT award. Section 2371 was amended so that currently subsection (a) makes no mention of the type of organizations eligible for an award. In its original form (legislative history indicates no substantive change was intended) it contained a laundry list of eligible organizations ending with “or any other entity.”

  3. Tom Clohessy

    Under 2373 authority, is the use of advance payments authorized? You state that purchase may take place on commercial or foreign terms with no reference to FAR procedures or contract clauses. In dealing with some foreign entities, a common practice is to provide funding up front, prior to receipt, when acquiring items. While it specifically states in 2371 that authority provided under 2371 may be exercised without regard to section 3324 of title 31, “Advances”, 2373 doesn’t specifically call this out. That being said, are advance payments authorized when using 2373 authority?

    • admin

      Section 3324 of title 31 U.S.Code, generally prohibits an advance of a “payment under a contract to provide a service or deliver an article…” The title of section 2373 is “procurement for experimental purposes.” It authorizes named officials to “buy…supplies…” The supplies bought are intended to be delivered so they can be used for experimental purposes. “Purchases may be made…by contract or otherwise.” A typical 2373 purchase involving a contract and the payment of appropriated funds would thus fall under section 3324’s prohibition. The “otherwise” might involve a barter transaction, a purchase with funds other than appropriations, if authorized. In general advance payments under section 2373 would appear to be prohibited.

  4. Michael Duffy

    When getting a commercial item using the 2373 do the usual commercial items clauses in the FAR still apply? For example, under usual commercial items purchases I can have the item slightly modified (change of thread count) so that it fits the Government needs can I still have that done under the 2373 action?

    • admin

      Purchases under 2373 are made “by contract or otherwise.” “Chapter 137 of this title applies only…” if purchases exceed those needed for “experimentation…or to provide a residual operational capability.” If 2373 is properly used, i.e. consistent with stated purposes and in quantities not exceeding those needed for the stated purposes Chapter 137, the Armed Services Procurement Act which is the basis of FAR’ does not apply. No FAR clauses are required including those applicable to commercial item acquisition. Section 2373 permits and encourages simplified contracting which is flexible and may replicate commercial contracting. Generally fiscal laws apply. Laws applicable to the procurement system do not apply.

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