Introduction
Other Transaction Agreements (OTAs) are again in the federal procurement newsfeeds because of new initiatives from the Department of Defense/War (DoD). I’ve represented companies in the negotiation and award of OTAs and taught classes to contractors on what they are and how to work with and towards them, while protecting their interests. Yet I’ve said many times: “If you’ve seen one OTA, you’ve seen one OTA!” DoD’s new attention will certainly bring new opportunities, but it comes with risks and uncertainties that can diminish their value or fail to bring the anticipated results.
What Are OTAs?
According to the Defense Acquisition University,[i] Other Transaction Agreements (OTAs) are valid U.S. Government contractual instruments other than standard procurement contracts, grants, or cooperative agreements. OTAs can include flexible business arrangements to acquire research and development activities to advance new technologies (Research OTAs), and prototypes or models to evaluate technical or manufacturing feasibility or military utility of new or existing technology (Prototype OTAs). This may apply to processes, concepts, end items, and systems from non-traditional defense contractors, as well as from traditional defense contractors when statutory requirements for small business participation or cost sharing arrangements are satisfied.[ii] Many laws and regulations governing federal contracts do not apply to OTAs (i.e., Federal Acquisition Regulation (FAR) and the Competition in Contracting Act (CICA)); however, the Procurement Integrity Act, most fiscal laws, and competitive practices are applicable.
OTAs provide opportunities to structure agreements that may leverage commercial business practices and remove barriers to entry such as cost accounting standards (CAS) compliance. Also, intellectual property rights requirements may be negotiated to encourage non-traditional defense contractors to do business with the government.
Awards can be made to a single organization or through a consortium organized around a particular technology or mission area. In recent years, the consortium model, and the creation of Consortium Management Organizations (CMOs), have become the dominant recipients of DoD OTA awards.
Promoting the Use of OTAs within DoD
The Department of Defense/Department of War (DoD) has the broadest legislative foundation for using OTAs. While first made available to the Defense Advanced Research Projects Agency (DARPA) in 1989, over time, Congress has expanded, tweaked and constricted their use by DoD. Now, they can be used for research and development or for prototyping. When appropriately planned for and successfully completed using either of these two types of instruments, they can also be used for follow-on production. According to a September 3, 2025, Government Accountability Office (GAO) report, DoD has obligated over $18 billion through OTAs in Fiscal Year 2024, the last full year for which data is available.[iii] According to a June 30, 2025, blog from FedConsult,[iv] total government OTA awards in Fiscal Year 2025 for all federal agencies was (only) $18.36 billion, with $18.12 billion of that coming from defense agencies. Total federal contract spend in Fiscal Year 2024 was $774 billion!
On March 6, in a Secretary of Defense memo titled “Directing Modern Software Acquisition to Maximize Lethality,” he directed DoD components to use OTAs “as a default procurement approach for software acquisition pathway efforts.[v] Then, on April 9, 2025, the President issued an Executive Order directing preferential use of OTAs for DoD acquisitions.[vi] Finally, on November 10, 2025, following the Secretary of Defense’s November 7 speech, the Department released it “Acquisition Transformation Strategy,” and under Pillar #1 to rebuild the defense industrial base, the strategy called on the department to maximize flexible contracting by promoting the use of OTAs, and indicated that the department will provide “additional resources, guidance and training” to expand the use of OTAs.[vii] Guidance and further instructions are to be issued within 90 days.
The “Wannabees”
Only 20 departments or agencies (or portions of agencies) have been given any type of authority to use OTAs in their acquisitions, and not every one of them has been given the full range of options that DoD has been given.[viii] In addition, many other federal agencies have petitioned Congress for either limited, unlimited, or expanded authority to use OTAs as part of their acquisition reform initiatives or to make temporary authority permanent.
Data Challenges at DoD
In its September 2025 report to Congress, the GAO noted that DoD “lacks full information about the outcomes of OTA use. For example, DoD cannot systematically track the extent to which DoD transitioned prototype projects using OTAs into production efforts. DoD also lacks aggregated data on the extend of NDC (non-traditional defense contractors) participation on OTAs.”[ix]
GAO also noted that, in July 2021, “DoD (could) still not fully identify which consortia members are performing the work awarded under consortia-based OTAs and recommended that DoD develop and implement a systematic approach to track consortium members performing on OTAs. DoD concurred in that recommendation and in June 2022, GSA added new data fields to the Federal Procurement Data System (FPDS) to identify awardees performing consortia-based awards. In this report, GAO reviewed the updated FPDS fields and found that 84 percent of the covered records contained the proper information.[x]
GAO’s report made two recommendations to DoD. First, that DoD develop and implement a systemic process to track FAR production contracts using DoD’s follow-on production authority. Second, that DoD fully and accurately report on consortia members performing on projects awarded under consortia-based OTAs.[xi] DoD concurred with both recommendations.[xii]
However, there is no other known independent review of how other agencies with some form of OTA authority have complied with the recordkeeping and reporting of their OTA transactions.
Conclusion
OTAs have been available to DoD for decades and to many other federal agencies (other than NASA which was the recipient of the original OTA authority in the 1958 Space Act), for many years. They provide a valuable alternative to agencies to meet unique or specialized need, when used by knowledgeable government agencies and sophisticated, even if not “traditional,” contractors. The renewed push by DoD will certainly accelerate the learning curve for both the department and for those companies who might find this procurement method attractive. But with opportunities will come risks and challenges that neither the government nor industry should take lightly or ignore. Both sides need competent and experienced professionals versed in the uniqueness of OTAs to be successful.
[i] Drawn from Defense Acquisition University (DAU), renamed in November 2025 as the Warfighting Acquisition University, Adaptive Acquisition Framework Contracting Cone, available at Other Transactions | Adaptive Acquisition Framework.
[ii] Unique to the requirements imposed by statute on the Department of Defense is to utilize “non-traditional defense contractors.” A non-traditional defense contractor is an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation of sources by the DoD for the procurement or transaction, any contract or subcontract for the DoD that is subject to full coverage under the cost accounting standards (CAS).
[iii] See Government Accountability Office report: “Other Transaction Agreements; Improved Contracting Data Would Help DoD Assess Effectiveness,” Sept 3, 2025, available at GAO-25-107546, Other Transaction Agreements: Improved Contracting Data Would Help DOD Assess Effectiveness, at 8.
[iv] See Archisha Mehan blog for FedConsult: Federal Procurement’s New Frontier: The Rise of OTAs, available at Federal Procurement’s New Frontier: The Rise of OTAs – GovSpend.
[v] See Memorandum for Senior Pentagon Leadership (and others), March 6, 2025, available at Directing-Modern-Software-Acquisition-to-Maximize-Lethality.pdf.
[vi] Executive Order 14265 (April 9, 2025), titled “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base,”, available at 2025-06461.pdf.
[vii] See Department War November 10, 2025, “Acquisition Transformation Strategy,” available at Acquisition Transformation Strategy, at 10.
[viii] As of August 2024. See Association for Talent Development Aug 9, 2024, blog titled “Unlocking Innovation: A Guide to Other Transaction Authorities (OTAs) for Federal Agencies,” available at Unlocking Innovation: A Guide to Other Transaction Authorities (OTAs) for Federal Agencies.
[ix] See Note iii, supra, at 8.
[x] See Note iii, supra, at 14.
[xi] See Note iii, supra, at 32.
[xii] See Note iii, supra, at 41.