Procurment Lawyer

Other Transaction Agreements: An Analysis of the Oracle Decision and Its Potential Impact on the Use of OTAs

by Annejanette Heckman Pickens and Daniel J. Alvarado

Annejanette Heckman Pickens is an associate general counsel with General Dynamics Mission Systems (GDMS) and the budget and finance officer of the ABA Section of Public Contract Law. Daniel J. Alvarado is a JD candidate (2019) at George Mason University, Antonin Scalia Law School. The authors would like to thank GDMS general counsel Devon Engel and vice president of contracts Jerzy Piatkowski for assistance with this article. Any opinions expressed in this article are the authors’ own, and not those of GDMS.

The Department of Defense (DoD), along with other federal agencies, continuously grapples with the question of how to acquire the newest, groundbreaking technology in a timely way, especially when that technology is produced by commercial companies that do not routinely contract with federal agencies.1 Many commercial companies hesitate to work with federal agencies because they perceive government contracting as a labyrinth of regulatory requirements and rigorous compliance obligations that are too costly and time-consuming to meet.2

To counteract this sentiment, Congress has provided DoD and a number of other agencies the authority to enter into “other transaction agreements” (OTAs).3 DoD has welcomed this authority as “a tremendously flexible acquisition tool that creates opportunities to spur innovation among defense contractors, attract companies with leading-edge technologies, and adapt business practices to explore innovative technology rapidly.”4

Agency spending via OTAs has more than doubled in the last five years, growing to a reported $2.3 billion in government fiscal year (FY) 2017.5 Other reports indicate that between FY 2015 and FY 2017 DoD spent nearly $21 billion through 148 OTAs.6 Congress has urged on this expansion by increasing the number of agencies that may enter into OTAs, broadening the purposes for which OTAs may be used, and raising the dollar values for various OTA projects.7 Indeed, the Senate Report on the FY 2018 National Defense Authorization Act (NDAA) lamented that agencies were taking “an overly narrow interpretation of when OTAs may be used” and continuing to burden innovative projects with “unnecessarily restrictive contracting methods.”8

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