Assessing the Use of Other Transactions Authority for Prototype Projects

Abstract : In 1994, Congress authorized use of OT for the development of prototypes 'directly relevant to weapons or weapon systems'. Under this authority, projects are not required to comply with procurement-specific laws and regulations. In effect, OT authority provides a blanket waiver of laws such as the Truth in Negotiations Act and the Competition in Contracting Act, and regulations such as the Federal Acquisition Regulation (FAR), and the defense supplement to the FAR. A principal objective of the legislation was to enable and encourage a broader range of commercial firms to participate in developing defense systems, thus bringing to such programs similar advanced technologies being developed for the commercial markets. During the 1994-1998 time period, 72 such projects began. RAND was asked by DoD to assess the experience provided by those projects. The objective of this assessment was to determine the overall effectiveness of this new acquisition approach. Specifically: Do the benefits expected from relaxing the process controls justify the possible costs that might be incurred? We conducted this assessment by performing a detailed examination of 21 projects, comprising about one-third of the total population that had accumulated some track record by late 1999. We addressed four topics: (1) What were the general characteristics of typical OT agreements? (2) What benefits appear to have been achieved through use of the OT process? VIII Assessing the Use of 'Other Transactions' Authority for Prototype Projects (3) Were there any apparent disadvantages encountered, and specifically were government interests appropriately protected? (4) What were the net effects after balancing the apparent advantages and disadvantages?