September 01, 2020 Procurement Lawyer

Other Transactions: A Small Step for Public Contracting, a Giant Challenge for Protest Jurisdiction

by Cherie J. Owen & Fernand A. (Fern) Lavallee

Cherie J. Owen, of counsel with Jones Day in Washington, D.C., counsels and represents clients in a wide array of government contracts issues, with a special focus on bid protests. She was formerly a bid protest hearing officer at the GAO. Fernand A. (Fern) Lavallee, a Jones Day partner, focuses his practice on public procurement and intellectual property rights in government contracts.

Government agencies have relied on Other Transactions (OTs) for more than six decades, since NASA was granted the authority to enter into OTs via the Space Act in 1958.1 The Space Act OTs were specifically designed as flexible contractual instruments with the primary purpose of research and development (R&D) efforts.2 These OTs were a potent tool used by NASA to enhance the country’s abilities to excel in the “space race” occasioned by the Soviet Union’s launch of Sputnik in October 1957.3 NASA continued to adroitly leverage Space Act OTs to successfully implement the ambitious space program in response to President John F. Kennedy’s challenge to the nation in 1961 to claim a leadership role in space exploration, starting with the landing of a man on the Moon by the end of that decade. In a historic achievement of epic proportions, and in retrospect a resounding testimony to the efficacy and promise of OTs, the late President Kennedy’s vision was fully realized on July 20, 1969, when two American astronauts walked on the Moon. Since enactment of the Space Act, NASA developed its own culture, approach, and corresponding rules and procedures for the use of the Space Act OT that remains unique among federal agencies.4

Other federal agencies generally did not receive the authority to enter into OTs until the late 1980s. In 1989, the Defense Advanced Research Projects Agency (DARPA) — then known as the Advance Research Projects Agency — received OT authority and immediately and aggressively pioneered its use.5 OTs remained flexible contractual instruments with R&D as a primary purpose, but the addition of Prototype projects authority in the National Defense Authorization Act for Fiscal Year 1994 as a legitimate domain for OTs vaulted the utility of OTs beyond the traditional realms of basic, advanced, and applied research.6 Prototype projects stretch OTs into certain uses that traditionally have been solely the province of acquisition, such as initial production runs and more recently sole-source follow-on production contracts, thereby effectively blurring the lines between OTs deemed to be non-procurement contracts and traditional procurement contracts subject to the Competition in Contracting Act of 1984 (CICA).

Not surprisingly, this special transaction type has become increasingly popular in the past few years. With the increase in use of these special contracts has also come an increasing interest in — and perhaps a need to (from a transparency and accountability perspective) — protest OT awards when an unsuccessful company believes the government has not complied with applicable laws or regulations. However, selecting the proper forum in which to file a protest of an OT award seemingly has proven not to be a straightforward task. The difficulty is due mainly to the fact that, while OTs are contracts with the government, by definition they are not procurement contracts.

Contractors attempting to protest the award of an OT have faced dismissal for lack of jurisdiction at the Government Accountability Office (GAO), at the Court of Federal Claims (COFC), and in federal district courts. At first blush, particularly for an aggrieved and frustrated offeror, it may seem as though OT protesters have nowhere to go and no ability to be heard. In reality, there is still hope and a well-established path: Each of these forums could potentially take jurisdiction over an OT protest if the procurement (and the protest) involve particular facts or arguments. Below, we discuss when each of the potential fora will — and will not — have, and presumably take, jurisdiction over the protest of an OT.

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