January 31, 2020 Public Contract Law Journal

Innovation in Government Contracting: Increasing Government Reliance on Other Transaction Agreements Mandates a Clear Path for Dispute Resolution

by Victoria Dalcourt Angle

Victoria Dalcourt Angle is a 2019 graduate of The George Washington University Law School, where she was the recipient of the Murray J. Schooner Scholarship for Government  Procurement Law, an associate of The George Washington Law Review, and winner of the 2018 Public Contract Law Journal Writing Competition. Ms. Angle graduated with honors from American University (B.A., 2016), where she had dual majors in History and Law & Society and a minor in Economics. She would like to thank her family for their endless support and the GW professors who provided her insight during the Notewriting process.

I.  Introduction: The Race to Space & the Creation of Other Transaction Agreements

On October 4, 1957, the first satellite to orbit the Earth crossed the night sky.1 The Soviet Union’s successful launch of Sputnik set the pace for an intense space race with the United States.2 Seeking to reassert its technological superiority over the Soviet Union,3 the United States launched its first rocket from Cape Canaveral on December 6, 1957, but the rocket’s thrusters failed within seconds, and it fell back to Earth.4 These events demonstrated the government’s need for faster technology acquisition to maintain competitiveness. President Dwight Eisenhower responded to the rocket’s loss by asking Congress to establish a civilian agency with a space exploration mandate.5 On July 29, 1958, Congress passed the National Aeronautics and Space Act (Space Act), thus establishing the National Aeronautics and Space Administration (NASA).6

In passing the Space Act, Congress granted NASA broad acquisition authority to achieve its objectives,7 including the authority to enter into “other transactions as may be necessary in the conduct of its work and on such terms as it may deem appropriate.”8 The Act thus created a new kind of procurement vehicle, called “other transaction agreements” (OTAs), and granted NASA exclusive authority to enter into OTAs.9

In the wake of the Act’s passage, the United States invested extensively in space technology, and on July 20, 1969, less than twelve years after the passage of the Space Act, NASA successfully landed the Apollo 11 astronauts on the moon.10

A.  OTAs Enable the Government to Procure Cutting-Edge Technology Quickly.

Today, the U.S. government purchases many of the goods and services it requires from the private sector.11 When agencies need to make a procurement, the process starts with instrument selection.12 Agencies can pay third parties to acquire necessary goods and services using several different types of procurement instruments, such as procurement contracts, grants, cooperative agreements, and OTAs.13

The purpose of enabling NASA to use OTAs was to expedite acquisition of cutting-edge technology.14 Since 1958, “other transaction” authority (OT authority) has been extended to other executive agencies, including the Department of Defense (DoD), the Federal Aviation Administration, the Department of Transportation, the Transportation Security Administration, the National Institutes of Health, the Department of Homeland Security, the Department of Health and Human Services, and the Department of Energy.15

OTAs are different from procurement contracts, which are subject to various laws and the Federal Acquisition Regulation (FAR).16 While the FAR and other regulations that apply to procurement contracts are burdensome,17 they promote competition, ensure transparency, and deter corruption.18 The reason for extending OTAs to additional agencies beyond NASA is clear: OTAs may enable faster, more effective, and more agile acquisitions than traditional government acquisition vehicles, which is vital in acquiring technology to address the nation’s security challenges.19 Furthermore, the flexibility that OTAs provide has allowed the DoD to partner with firms that infrequently participate in government contracting due to industry perception that government contract regulations are overly burdensome.20 However, there is uncertainty surrounding the appropriate forum when disputes arise during OTA performance or when contractors wish to protest the award of an OTA.21

B.  The Purpose of This Article

Two major categories of disputes arise in government contracting: bid protests and contract claims.22 Bid protests arise during contract formation when an interested party challenges an agency’s procurement action.23 Contract claims arise during performance of a contract when the agency and the contractor disagree about a question of fact or law relating to contract performance and seek remedies.24 This article focuses on disputes arising during the performance of OTAs. It is important to recognize the limited review of OTA solicitations and awards. Generally, the Government Accountability Office’s (GAO) bid protest jurisdiction does not extend to the review of OTA awards.25 However, the GAO will review challenges of OTA awards in limited circumstances, such as when a protestor alleges that an agency improperly used an OTA rather than a procurement contract.26

1.  Limited Review of OTA Awards

The U.S. Court of Federal Claims (COFC) recently concluded that it did not have jurisdiction to hear a post-award bid protest concerning launch service agreements (LSAs) issued by the DoD under its OT authority.27 In Space Exploration Technologies Corp. v. United States, Judge Lydia Kay Griggsby stated that LSAs are not procurement contracts, and “relief in bid protest matters pursuant to the Tucker Act is unavailable outside the context of a procurement or proposed procurement.”28

In this protest, Space Exploration Technologies Corp. (SpaceX) challenged the Air Force’s evaluation and award decisions for space launch services.29 The Air Force had issued a request for proposals (RFP) for space launch services for national security missions pursuant to its OT authority, 10 U.S.C. § 2371b.30 The purpose of the LSAs was to provide awardees with funding from the Air Force to develop launch system prototypes.31 The LSAs would allow the technology to mature before the Air Force awarded contracts (referred to as “Phase 2” procurements) for launch services.32 The Phase 2 procurements would be separate from the LSAs and would be “open to all interested offerors.”33 SpaceX and three other offerors submitted proposals in response to the LSA RFP, but SpaceX was not selected as an awardee.34

Following SpaceX’s filing of a bid protest with the COFC, the government moved to dismiss the bid protest for lack of subject matter jurisdiction, arguing that SpaceX’s protest does not concern a procurement or proposed procurement and thus is outside of the court’s Tucker Act jurisdiction.35 SpaceX argued that the court did have jurisdiction to hear its claims, but moved in the alternative to transfer the matter to the U.S. District Court of the Central District of California.36

The key issue in this case was whether the COFC has subject matter juris- diction over a bid protest brought by an offeror objecting to the evaluation and award of an LSA. Judge Griggsby stated that the Tucker Act provides the court with jurisdiction to hear bid protests brought by ‘“an interested party objecting to a solicitation by a [f]ederal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.”’37 While the parties agreed that the LSAs at issue in the protest were not procurement contracts, SpaceX argued that the LSAs were awarded in connection with the Phase 2 procurement and should therefore fall within the court’s Tucker Act jurisdiction.38 The court found that the LSAs were separate from the Phase 2 procurements; therefore, the court granted the government’s motion to dismiss for lack of subject matter jurisdiction, dismissed the complaint,39 and granted SpaceX’s motion to transfer the matter to the district court.40

While the LSAs at issue in this case were not procurement contracts and consequently could not be reviewed by the court under the Tucker Act, the court noted that its decision did “not reach the issue of whether other transactions generally fall beyond the [c]ourt’s bid protest jurisdiction under the Tucker Act.”41 Therefore, the case is not conclusive as to whether disappointed offerors may challenge OTA awards at the COFC. Moreover, the case is limited to bid protests and does not address the question of whether the COFC has jurisdiction to hear claims against the government that arise from OTA performance.

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